Here’s How You Can Avoid Auto Insurance Fraud in India

Auto insurance frauds have become extremely common nowadays. While it generally makes individuals as victims, such scams also dupe the auto/motor insurance industry of huge losses making both individual policyholders and motor insurance companies vulnerable to such frauds.

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This article will help you understand all the facets of auto insurance fraud in India and how you can take preventive measures to keep yourself financially protected.

What Is a Fraud Car Claim?

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

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 false claim.

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

Types of Auto Insurance Frauds

Auto 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 auto insurance frauds:

1. Fraud against the Insurer: Such a type of fraud involves insurance companies as the victims against individual policyholders. Such individuals use extreme methods to deceive the 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 at 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 not new and 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 created.

How Can You Protect Yourself from Such Frauds?

The foremost important step for you is to remain aware of how such scams are conducted as a majority 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 aggregators such as Policybazaar do not involve any middlemen. 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 cross-check about the insurance policy you are about to buy by calling the customer care representatives as well as verify further details about the 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.
  • Wisely choose your Mode of Payment: Make sure that 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 savior 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.

Auto 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 activity in an auto insurance fraud 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.

Takeaway

Auto Insurance fraud is not a new thing in the market. Such scams have been practicing 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 from our site and seek help from our experts over email i.e. care[at]policybazaar[dot]com and call us at 1800-208-8787.

Written By: PolicyBazaar - Updated: 20 September 2021
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