Auto insurance is a mandatory requirement for any individual who wishes to operate a motor vehicle. In addition, 49 states and the District of Columbia require individuals to have liability insurance to show financial responsibility in the event of an accident. In some areas, drivers cannot register their car until they demonstrate proof of insurance. In other words, choosing a car insurance company is something most individuals have experience with. However, few remain with the same insurance company throughout their lives, often switching providers or checking car insurance quotes online in order to obtain the best deal. While in theory this will save an individual money, in recent years there have been a number of car insurance scams that have propped up online, hoping to bait unwitting users with highly attractive rates.
Beware of Lump Sum Premiums
A common method employed by scam artists is to set up a car insurance company and offer a lower rate for individuals willing to pay in advance. Most reputable insurance companies either do not or are legally unable to offer a lower premium for lump sum payments. Be sure to always pay your premiums monthly or check with a ratings organization such as A.M. Best to verify the business is legitimate.
Quote Rate Error
Some companies will offer direct car insurance quotes for the first few months and attempt to take advantage of a customer’s indolence with a clandestine fee hike. This is typically done through a purposely vague letter notifying you about changes to your account. These changes may include a supposed error in the original quote hidden amongst a wall of recondite legal terms. If you receive a notice shortly after signing up for direct car insurance, check for any rate hikes and call their customer service to make sure no additional charges are being made.
Thankfully, state regulatory laws and nonprofit organizations prohibit companies from engaging in more pernicious car insurance scams. In fact, the most common scams in relation to car insurance arise from individuals looking to take advantage of the insurance company by orchestrating a collision. Nevertheless, it’s important for every customer to thoroughly research a car insurance company before they purchase a policy, particularly when the rates offered are precipitously lower than the competition.