Car Insurance Fraud In India & How To Avoid It?

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Car insurance frauds have become extremely common nowadays. While it generally makes individuals as victims, such scams also dupe the motor insurance industry of huge losses making both individual policyholders and motor insurance companies vulnerable to such frauds. This article will help you understand all the facets of car insurance fraud in India and how you can take preventive measures to keep yourself financially protected.

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      What is a Car Insurance Fraud?

      Car insurance frauds constitute any type of fraud or scam made under vehicle insurance. These frauds can be against a policyholder or a motor insurance company. They are mainly committed by fraudulent means during a policy purchase, or sale of a policy or even by false car insurance claims.

      Fraud car claims or Claim frauds cost the insurance industry a huge sum every year. About 90 per cent of auto insurance fraud is the result of claims padding (which means adding damages, injuries and fictitious passengers to insurance claims). The other 10 percent of claim fraud comes from organized accident staging.

      For instance, innocent victims like private motorists, truck drivers, etc. are targeted by organized auto-accident rings. These rings make an “accident” happen by setting up innocent people for a rear-end collision. Reporting that your car has been stolen when you really hid it in the woods is a good example of a false claim.

      Even if one never files a claim, lying on the application for insurance is still accountable for fraud cases. Using forged documents for claiming is also a fraud case.

      Most Common Car Insurance Frauds

      Motor insurance fraud can be committed by either of the parties involved in an insurance agreement, i.e. the insurer or the insured. Following are the 2 main types of car insurance frauds:

      1. Fraud Against the Insurer

        Such a type of fraud in car insurance involves insurance companies as the victims against individual policyholders. Such individuals use extreme methods to deceive insurance companies into believing that they have to settle a claim. Their methods include staging accidents and targeting innocent individuals.

      2. Fraud Against the Insured

        When it comes to auto insurance frauds, most fingers are usually pointed at individual policyholders not realizing that the fault can be on the other side of the coin too. Yes, motor insurance frauds are also committed by insurance agents using policies that are fake leading the policyholders into a vicious trap.

      Auto Insurance Fraud Against the Policyholder

      Car insurance frauds against policyholders are increasingly on the rise. This makes it important for you to know how such crimes are deceiving people into buying fake insurance policies by offering a massive discount on the premium amount.

      Such fake companies reach out to potential unsuspecting clients with such appealing offers and make money by not providing the promised insurance coverage. You would not even notice that they have given you a fake insurance policy until you raise a claim and then realize that you have been cheated.

      Ways to Protect Yourself from Such Frauds

      The foremost important step for you is to remain aware of how such scams are conducted as most of the frauds are carried out against unsuspecting victims. Hence, identifying a fake insurance policy is critical before you go ahead and buy the plan for your vehicle.

      Following are a few precautionary measures you can take before buying your next car insurance policy:

      • Skip the Agents & Intermediaries: Start with directly buying from licensed and authorized insurance companies, cutting on the agents and intermediaries. Insurance brokers such as Policybazaar.com do not involve any middlemen or agents.. Being a digital insurance company, you can directly buy car insurance online, thereby eliminating the probability of insurance fraud against you. Keep in mind that not purchasing valid car insurance from reputable companies which are not registered with IRDAI just because they are cheaper can end up wasting a lot more money than you would end up saving.
      • Verify before Purchasing: You should also cross-check the car insurance policy you are about to buy by calling the customer care representatives as well as verify further details about the car policy on the company’s official website. Having said that, most insurance companies these days have a call-back process to evaluate whether their client has fully understood the terms of the policy. This itself becomes a genuine stamp in the policy.
      • Choose your Mode of Payment Wisely: Make sure you pay for the policy with a cheque, credit card, or any other online mode of payment. With this, the payment directly goes to the insurance company and not an agent or middle-man if they are involved in the deal.
      • Ask for the Receipt: Your premium payment receipt will be your saviour in situations where you suspect anything fishy in your profile. The receipt is the only valid document that shows that you have paid the amount to the concerned authority. Keep this document ready for future purposes as you can produce them as a piece of evidence in the court of law.

      Car Insurance Fraud Against Insurance Companies

      It is not always individual policyholders that are victims of auto insurance scams. Sometimes, it’s the vehicle insurance companies that have to bear the consequences of fraud.

      Attempts are made by policyholders to cheat insurance companies for monetary gain. Following are a few fraudulent activities you should be aware of:

      • Staging an accident: The most common car insurance fraud in vehicle insurance is faking an accident. Such accidents are pre-planned so that the damage caused due to the collision will be such that a claim can be raised with the insurance company.
      • Targeting innocent victims: Another aspect of staging accidents is targeting innocent victims on the road by involving them in the accident. Such victims include truck drivers as well as bike riders who are accused of being involved in the accident so that a claim can be raised.
      • Padding claims: To receive a huge sum of money from the insurance company, injuries and damages are added to an accident. It becomes very difficult to verify the legitimacy of the accident and due advantage is taken because of this to claim insurance money. Such incidents also involve exaggerating the damages for monetary gains.

      You should be aware while driving on the road as accidents can happen to you as well and you can involuntarily end up being involved in a fraudulent scam.

      Wrapping Up!

      Auto insurance frauds have been in practice for decades and every individual policyholder needs to be aware so that they can stay cautious. The auto insurance industry involves a lot of money flowing through multiple channels and wherever such large sums of money are involved, there will always be a high possibility of fraud. So it is our responsibility to take preventive measures and make sure that we are aware of such fraudulent scams and do not become a part of this scrupulous auto insurance network. To save yourself from such frauds, you can buy car insurance online directly from Policybazaar.com after proper comparisons.

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