If you’re in the market for new insurance, it can be difficult to tell which company has your best interests at heart and which ones are simply out to scam you and make money off of you in whatever way they can.
They are many Ways to Identify a Scam Insurance Company and Here are ways to know, avoid scam companies.
Ways to Identify a Scam Insurance Company
1) They’re not registered with the National Association of Insurance Commissioners
It’s one of the first things you should do when shopping for insurance: make sure the company you’re considering is registered with the National Association of Insurance Commissioners.
NAIC registration is the only objective, nationwide evidence that an insurance company has met minimum standards for financial stability, regulatory compliance and consumer protection.
To register, an insurance company must submit information to NAIC about its operations and financial condition.
NAIC then examines the data and determines if the company is able to provide basic protections for policyholders.
If you are unsure whether your agent or broker represents a legitimate insurer, ask him/her to provide documentation proving NAIC membership.
2) They don’t have a physical address
Most legitimate insurance companies will have an office with some type of physical address.
This is where you’ll want to go if you need help with your policy, want to make changes, or any other type of customer service request.
If the company doesn’t have a physical address, there’s no way for them to provide what they promise in a timely and effective manner.
When this happens, it may be time for you to ditch the company and find one that does.
They don’t use email: Any reputable business should have email available as a means of communication with their customers.
It’s not just necessary for providing you with updates on your policy but also for filing claims when needed.
They offer too many discounts: If someone offers you a discount without asking why, then chances are it’s not actually real.
Discounts are usually offered to those who qualify – meaning those who buy policies at higher rates – so if someone offers one without qualification then it could very well be too good to be true.
3) They’re not rated by independent rating organizations
One way to identify if an insurance company is legit is by checking their rating on the Better Business Bureau website.
The BBB reports on the number of complaints filed against that company, what percentage of those complaints were resolved, and how many years they’ve been in business.
If you’re still not sure if it’s legitimate after looking at their BBB report, then do some research on your own.
Type insurance reviews into google or another search engine and see what pops up. It will give you lists of different websites where customers have reviewed their experience with the company.
Be aware that there are also scam companies out there who pay people to leave good reviews about them online so you can’t always believe what you read.
But, if most of the negative reviews are coming from other scam companies or people who weren’t happy because they didn’t get a certain type of coverage or felt like they were getting ripped off then chances are this company might be trying to pull one over on you too.
4) They’re not licensed in your state
If you’re looking for an insurance company, make sure that it’s licensed in your state. A company without this license could be trying to scam you.
To find out if a company is licensed in your state, call the Department of Insurance or visit the Department of Insurers website.
You can also check the National Association of Insurance Commissioners (NAIC) website.
The NAIC licenses insurance companies and registers them with the states’ Departments of Insurance.
These websites are great tools to help you identify which companies are legitimate and which ones are not.
They have contact information and they provide links to all their local state departments of insurance so that you can see what the company is doing across the country.
5) They don’t have a good Better Business Bureau rating
One way of identifying a scam insurance company is by looking for their Better Business Bureau rating.
A company with good BBB ratings may be more trustworthy and reliable than one with bad BBB ratings.
If you find that the insurance company you are considering doesn’t have any BBB rating, it might not be the best idea to go with them, as they could have something wrong with them that has not been brought up yet.
They don’t offer customer service over the phone: In order to do business, an insurance company should offer some sort of customer service.
While they can provide their contact information online, if you call them there should be someone available to take your call and answer your questions in person.
They won’t put any time into selling me a policy: It’s important for an insurance agent or broker to show interest in the client when selling a policy.
You want someone who will spend time finding out what you need from your policy and what kind of coverage you need before recommending one or two companies that would fit your needs best.
6) They don’t have positive customer reviews
When shopping for an insurance company, it’s important to do your research.
The best way to know if you’re dealing with a scam is to look at their reviews and see what previous customers have said about them.
There should be plenty of positive reviews that say good things about the company. If there are no reviews at all or if they are all negative, then you may want to take that into consideration.
Don’t just take this one piece of information in isolation; other factors like price and coverage need to be looked at as well before making any decisions.
But customer reviews can give you some insight into whether or not this could be a scam.
They don’t seem professional: You never want to work with someone who doesn’t come across as professional.
A company will usually put some time and effort into how they present themselves on their website so that people can get a better sense of who they are and what services they offer.
7) They’re trying to sell you something you don’t need
The best way to identify a scam insurance company is if they try and sell you something that you don’t need.
A good rule of thumb is, if it seems too good to be true, it probably is. Beware of anyone who tries to convince you that your current coverage isn’t sufficient or they’ll use scare tactics such as saying you’re required by law to purchase their product or risk fines.
Beware of anyone who tries to convince you that your current they’ll use scare tactics such as saying you’re required by law to purchase their product or risk fines.
They may offer discounts for signing up today: It’s never wise for someone looking for insurance to sign up on the spot.