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How to spot insurance agent fraud

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KANSAS CITY, Mo. – Insurance agent fraud scams may not be easy to spot, and unfortunately can happen to anyone including both everyday people and even celebrities.

The most recent example of insurance agent fraud was in November of this month when a man, who had sold insurance to actor Tom Hanks and his wife, was sentenced to two years in federal prison for defrauding them out of hundreds of thousands of dollars.

The most common scam that happens is when an agent steals your premium, and instead of using it to buy insurance, and then pockets the money. A scam like this took place just a couple of years ago in Kansas.

Another way fraud can strike is if an agent flat out sells you a fake insurance policy, which often is accompanied by a fake insurance certificate. Or how about the agent who continually sells you coverage you never needed.

One example is called churning, which is where the agent will convince you to use the value you've built up in a current policy to buy a different policy that is supposedly better, but is actually unnecessary. Or the agent might slip in extra coverage that you never asked for, but then end up paying for every month.

According to the Coalition Against Insurance Fraud the most common policies that tend to be scams are motor club memberships, accidental death coverage, and guaranteed renewable life insurance.

The coalition also said some red flags to help spot a dishonest broker would be if the coverage offered is half the price of what competitors are offering, the agent wants you to sign a blank insurance form and tells you they will fill it out later, or the agent wants you to pay in cash or write the check to directly to them. They suggest you ask to write the check to the insurance company, and also take a photocopy of your check.

Finally, the agent should not bill you directly for your premiums. Bills should be coming from your insurance company and not the agent.

Some things to do to protect yourself against fraud include getting multiple quotes from different insurance agents, checking if your agent has a license with your state's department of insurance, and after reviewing all of your insurance coverage, call the insurance company to make sure you are actually enrolled. Do not just take your agent's word for it.

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