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Insurance Scams Consumers Should Watch for in 2005
WASHINGTON -- Fake health insurance, insurance-agent scams and stolen airbags are among the eight insurance swindles consumers must watch for in 2005, the Coalition Against Insurance Fraud forecasts.Insurance cons will remain widespread around the U.S. despite progress in cracking down on the crimes. Many scams persist year after year. They can steal from a few dollars to life savings. They also can threaten your health and even life.Here are a few tricks of the trade to watch out for:Fake health insurance. Swindlers sell bogus health coverage to small business owners and consumers. They promise discount prices and generous benefits -- but later refuse to pay claims. Your premiums are stolen, and you're forced to pay medical bills yourself. Your health also can be jeopardized by delays in treatment.Action: Contact insurance department to ensure plan is licensed.Airbag fraud. Crooked body shops remove deployed airbags from cars and fill the cavity with old rags or beer cans. Then they falsely bill your auto policy for a new airbag. Your life is at risk without airbags, and your insurance is charged for expensive items you didn't pay for.Action: Have outside mechanic inspect after repairs, or before you buy used car.Stolen premiums. Most insurance agents are honest, but some take your premiums without buying coverage. You have no insurance when making a claim for damage to your car, home or business.Action: Avoid writing premium check to agent. Call insurer to confirm you're covered.Churning. An agent convinces you to use the built-up value of your whole life policy to buy a "better" policy you don't need. You must start building up your policy's cash value again. Seniors are especially at risk.Action: Get second opinion from financial adviser before buying.Sliding. An agent secretly "slides" unwanted expenses into your policy, especially auto coverage. Your premiums can increase by $100 to $200. Motor club memberships and accidental-death coverage often are added. Action: Read policy and prices closely before signing. Never sign blank insurance form.Staged accidents. Innocent drivers are maneuvered into car crashes, sometimes at dangerous speeds. Crooks then make fake injury claims against your auto policy. Sometimes they suddenly brake so you rear-end their car. Or they speed into your path when you pull out of a parking space.Action: Never tailgate. Be wary of a driver waving you out of parking space.Windshield fraud. Cons offer to replace your windshield for free, even when undamaged. You have a needless claim against your auto policy, and may have shoddy glass and poor installation that endanger your life. Crooks may also secretly make more claims against your policy. The cons approach people at car washes, gas stations and county fairs.Action: Just say no.Viaticals. Consumers buy fake investments in life policies of people who are sick or dying. A crooked viatical firm promises you a payout when the policyholder dies. But the policies were obtained fraudulently, or never existed. Your investment is void and your money is gone.Action: Avoid anyone promising guaranteed returns. Have financial adviser confirm plan is legal, and right for you. Finally, if you have questions, contact your state insurance department. Many warning signals also are posted at the Coalition Against Insurance Fraud's Web site.Visit the Coalition Against Insurance Fraud: www.insurancefraud.orgThis article is new this week in The Business Journal's small business how-to section. To see what else is new, click here or click on the "how-to" tab at the top of The Daily Business Journal Online home page."