Be Afraid of Ghost Policies
Are you unknowingly driving with a ghost? There are two types of insurance ghosts: 1. People who use your address to get a better rate on car insurance, and 2. Fake insurance policies sold at unbelievably cheap rates. Either kind should frighten you.
Ghost policies come in four different forms:
- A dishonest person using someone else’s home address (yours?) that is in a lower risk area than where he or she actually lives, resulting in an auto policy that is cheaper than it would otherwise be. Why does this happen? Because insurance companies consider some neighborhoods or towns safer than others, meaning few incidents of car theft or vandalism, and auto insurance rates are lower there. This means that two people with similar cars and similar driving records could have very different premiums, depending on the address where the car is garaged – or not garaged – at night.
If you do now – or begin to – receive mail for individuals who do not live at your address, or who never lived at your address, it’s possible someone has “ghosted” your home address on their insurance application. If they are using your home address for their car insurance, what else are they using your information for? Perhaps you can out that specter with a call to your state insurance department or the local police.
- But sometimes your ghost can be a victim, too. Unknowing individuals can be tricked by an insurance salesperson that provides false information on the insurance application so as to get lower rates for the customer.
- Some ghost policy scams happen with insurance agents set up a real policy for a customer, but secretly cancel the policy with the carrier, and keep your premium payments for him or herself – leaving the driver without a valid policy.
- Sometimes the ghost policy scammers aren’t even real insurance agents to begin with – but sell phantom policies, issue real-looking insurance cards, but pocket your premiums.
A Scary Scenario
If you are pulled over and found to have a “ghost” policy, whether intentionally or not, there could be some very serious consequences, such as traffic citations, license suspension, the impounding of your vehicle and court fines. An even worse situation could occur if you are in an accident that results in deaths or serious injuries – and you then discover your policy was only an apparition. If at fault, you could be on the hook for amounts of money that could be devastating to your financial situation.
Who is Most Likely to be Haunted?
Typically, young drivers with high premiums or not-so-great driving records are targeted by ghost policy scammers, as are lower-income immigrants who don’t fully understand who is – and isn’t – a legitimate insurance agent, but are eager to save money.
How to Protect Yourself
Call your state’s department of insurance and confirm that your agent has a license and that the insurance company is licensed, too. This is an especially important step if the insurance company isn’t one you’ve heard of before – and if your first introduction to them comes when a salesperson knocks on your door, emails you or reaches you via telemarketing.
It is also a good idea to personally contact your insurance company directly and make sure that your coverage is real and that your premiums are being received and properly credited to your policy. Make sure that your policy number matches the insurer’s records, and watch out for typos and misspellings in the way your name – or the insurance company’s name – appears on the policy or the insurance card.
For additional information about insurance (of any kind), contact us anytime.