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Did you buy fake car insurance?

No wonder people fall for fake car insurance scams.

When everyone else asks for thousands of dollars to provide a
little piece of paper that allows you to drive legally, the guy who
asks for only hundreds seems like a saint.

Until you have to file a claim. Or get stopped by a cop.

Actual statistics are hard to come by, but these bogus auto
insurance agents and companies scam drivers across the U.S. and in
other countries every day. They fleece the public by collecting
premiums for coverage from a company that doesn’t exist and will
never pay out after a claim.

“Fake auto insurance is probably more prevalent today than in
the past,” says CarInsurance.com consumer analyst Penny Gusner.
“Individuals now have the means to Photoshop fake insurance cards,
and the Internet allows scammers to reach desperate people more
easily.”

How common is fake insurance?

In January, the Michigan Office of Financial and Insurance
Regulation (OFIR) warned Michigan drivers that they may have
purchased fraudulent auto insurance certificates from an unlicensed
insurance agent. OFIR ordered Mervin Graber to stop conducting
unlicensed and fraudulent insurance through his company, Tennessee
Christian Motorist Aid.

The Detroit motorists who fell for the scam face car insurance
rates that are among the nation’s highest. Even good drivers
in some ZIP codes

could face bills that top $4,000 a year.

“Any driver who purchased this fake auto insurance through Mr.
Graber needs to purchase legitimate coverage immediately,” OFIR
Commissioner Kevin Clinton told Michigan drivers. “Right now
they’re driving without insurance.”

The U.S. isn’t the only place these auto insurance scams are
taking place.

In Great Britain, fake car insurance brokers known as “ghost
brokers” — operating through websites and taking out small
newspaper ads — defrauded British drivers by offering cheap car
insurance, and the result was that 20,000 motorists in Britain
ended up
driving around uninsured

.

A note for the do-it-yourselfer

An insurance card can be faked, either on paper or
electronically. Many folks try it. But you can’t outrun the
Internet. States are rapidly adopting real-time electronic
verification systems that check for a current policy in seconds.
(See ”
Proof of insurance: Paper or plastic?

“)

Even in states without a real-time verification program,
occasional sting operations will check every driver stopped during
the course of a day, for example. Insurance companies stand by to
verify information by phone.

Don’t expect a warning.

“It’s not a question of ‘please don’t take me’,” Broward
Sheriff’s Office Deputy Robert Boris told NBC 6 in Miami last fall.
“If you’re fraudulently changing your insurance card, you’re going
to jail.”

Instead of a ticket or a license suspension, you could face
prison time for a fraud conviction. In Nebraska, for example,
fabricating an insurance card is a felony punishable by up to five
years in prison and/or a $10,000 fine.

Is there a company behind that insurance card?

The difference in price between legitimate insurance companies
can be thousands of dollars, especially for high-risk drivers. A
price that’s dramatically lower than the rest — especially from a
company you might never have heard of — warrants a little
checking.

First of all, says Gusner, “if a deal sounds too good to be
true, it probably is. No one will write a policy for $500 a year if
every other quote you’ve heard is for $5,000.”

She also offers these other red flags:

  • Misspellings in any paperwork that you’re given by an
    insurance agent
  • An offer of insurance from anybody who knocks at your
    door
  • A demand for payment in cash or with a money order
  • No documentation or ID card provided
  • An agent willing to backdate your policy

If you are in any way uncertain, get the license number of the
agent and make certain that the license is real. You can look up
the license records at your state department of insurance. (You can
find a link on
your state’s insurance profile

page.)

Also, check out the insurance company’s rating online with A.M.
Best to make sure it has the financial strength to pay out any
claims — or if it exists at all.

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