5 Ways Small Business Owners Can Avoid Insurance Scams
Dan Levenson February 01, 2018
Tragically, insurance fraud occurs more often than most people think it does. In fact, nearly every type of business has been a victim of insurance scams and fraud. That’s why it’s important you know how to avoid insurance scams. Besides being monetarily detrimental to small businesses, this problem is also financially damaging to the overall economy.
Basically, insurance fraud is when a person intentionally lies to a potential client for obtaining benefits that aren’t otherwise entitled to them. It can also occur when someone purposely denies you a benefit that you’re entitled to receive.
If you’re a small business owner, it’s imperative to be aware of what’s involved in insurance fraud, in addition to knowing how to avoid an insurance scam. So, here are five ways you can prevent insurance scams, along with a few other considerations and warnings.
Meet Directly with an Agent
Unfortunately, sometimes business owners conduct business with insurance representatives over the phone. As a result, they could be doing business with scammers. You should insist on meeting with insurance representatives face-to-face to be sure they’re for real and not scammers. Furthermore, be suspicious if an agent tries to do business in atypical places, such as in a bar, eatery, or home.
Be on the Alert for Bogus Insurance Plans That Seem Too Cheap
Often, insurance scammers post information on ads and flyers they send to email accounts. One way to suspect an insurance plan is phony is if the premiums seem considerably lower than the average company. Find out what the normal price range is, and don’t be deceived into falling for a policy that offers 30 to 50 percent lower coverage than its competitors. Consider how you could be charged with costly fees later.
Be Wary of an Agent Who Can’t Give Out Basic Information
Another clue is an insurer failing to answer questions or provide other critical information, such as a listed phone number, claiming it’s too hard to give out information over the phone. Moreover, if an agent is too aggressive, pressuring you to buy a policy immediately because “the premiums will increase,” don’t fall for it.
Do Comprehensive Research on Insurance Companies
You need to be familiar with the name of an insurance company and make sure the firm is licensed within your state. Besides reading and understanding their pamphlets, do a thorough investigation of their website, checking out anything that appears to be strange. What’s more, contact a local consumer assistance agent or your Better Business Bureau to check for any complaints that have been filed against a company.
Find Out the Charge of an Upfront Payment
It’s critical you find out how much you’ll be charged up front, as well as the amount you’ll have to pay out-of-pocket. Consider that you shouldn’t be charged unless you make changes to your plan.
Other Considerations and Warnings
- Carefully read everything on a policy, including the small print. If you’re unable to read or understand something, ask someone to explain what it means before signing a policy.
- Don’t give credit card information over the phone to a representative. Instead, wait for an insurance company to mail you the proper paperwork.
- Ensure a company provides clear details on the insurance claims forms and don’t sign a blank form.
- Be sure you choose an insurance plan that is useful. In other words, don’t commit to any additional items that you don’t need as this can mean paying more.
- Be leery when an agent tells you that you have to pay in cash.
Although accidents can occur at a workplace, you don’t have to worry about covering for damages when you buy an insurance policy that gives you protection against all losses that can result. If you need a quote from an insurance agency you can trust, contact us today!