Insurance is meant to provide financial protection, but scammers are always looking for ways to take advantage of policyholders. From fake policies to staged accidents, insurance fraud costs billions each year—and you could be the next target. Learn how to spot common insurance scams and protect yourself from fraud.
Common Types of Insurance Scams
🚨 1. Fake Insurance Policies
Scammers pose as legitimate agents, offering cheap “too good to be true” insurance policies. Victims pay premiums but later find out they have no real coverage when they file a claim.
✔ How to avoid it:
- Verify the insurer is licensed in your state by checking with your state’s insurance department.
- Be wary of unsolicited offers or pressure to buy immediately.
- Always make payments directly to the insurance company, not an individual agent.
🚨 2. Staged Auto Accidents
Fraudsters cause accidents on purpose and then blame you to collect insurance payouts. Common setups include:
- Brake Slam – The scammer suddenly slams their brakes, causing you to rear-end them.
- Wave-In Scam – A driver waves you in, then crashes into you and denies signaling.
- Fake Witnesses – “Bystanders” at the scene back up the scammer’s false claims.
✔ How to avoid it:
- Keep dashcam footage to prove what really happened.
- Call the police for every accident, even minor ones.
- Take photos and videos of all vehicles and the scene.
🚨 3. Ghost Brokers (Fake Insurance Agents)
Fraudsters pretend to be legitimate agents and sell fake policies. Victims don’t realize the scam until they file a claim and are told their policy doesn’t exist.
✔ How to avoid it:
- Only buy insurance from licensed companies.
- Verify the agent’s credentials through your state’s insurance department.
- Avoid agents who only accept cash or wire transfers.
🚨 4. Inflated or Fake Claims
Some scammers fake injuries or exaggerate damage to collect higher payouts.
- Example: A minor car accident results in a claim for serious, long-term injuries.
- Example: A homeowner damages their own property and claims it was an accident.
✔ How to avoid it:
- Always document damages thoroughly with photos/videos.
- If you’re in an accident, get witness statements to verify the truth.
🚨 5. Health Insurance Fraud
Medical providers overbill or charge for services that were never performed. This can lead to higher costs for both you and your insurance company.
✔ How to avoid it:
- Review your Explanation of Benefits (EOB) for services you didn’t receive.
- Only visit trusted doctors and hospitals.
- Report suspicious charges to your insurance company.
How to Report Insurance Fraud
If you suspect fraud, report it to:
- Your insurance company’s fraud department
- The National Insurance Crime Bureau (NICB) – 1-800-TEL-NICB
- Your state’s insurance fraud bureau
Stay Safe and Stay Insured
Insurance scams can be costly and frustrating, but knowing how to spot fraud can help you stay protected. Always verify insurance policies, document accidents, and be cautious of deals that seem too good to be true. If something feels off, trust your instincts—your financial security depends on it!