Insurance Scams – Churning and Sliding
Insurance is a lucrative business, some of the biggest insurance companies in the world are some of the biggest companies in the world. It is a competitive and ever-developing market with companies looking to get one over each other by offering a better deal or more comprehensive coverage for better value for money.
As everyone needs insurance in some form or another, particularly vehicle insurance (which is a legal requirement after all) there is the potential for making large sums of money. As a result there are always going to be people out there who are looking to make money quickly and are not particularly concerned with the legality of their methods.
You may find that you come across small companies who you have not heard much about that offer excellent deals, but you should be careful and make sure that everything is legitimate before you go ahead. That is not to suggest that every small insurance company is illegitimate in some way, there are some excellent deals out there if you have the time to go and find them, but you should be wary when dealing with people and companies of whom you have not heard before.
One way insurance scams operate is to sell policies and coverage that you don’t actually need. There are two forms of this, one is known as churning and the other is known as sliding.
Churning
Churning is when sales agents convince customers to use the value of their current whole life policy to buy a ‘better’ policy when their present coverage is already more than suitable for their requirements. This is lucrative for the agent because they may get a commission but the policyholder will have to start building up cash value in their policy all over again. Technically this is not illegal and is difficult to avoid, but make sure that you are aware of what you need from your insurance. People looking to scam you will often prey on your lack of knowledge, so make sure that you know everything that you need to, and if you’re not sure don’t agree to anything until you know what you’re doing.
Sliding
Sliding is when an insurer or agent sells you extra coverage that you didn’t ask for and didn’t know about – but you do pay for. Though this may not be a large amount, it’s still your money and you shouldn’t part with it unless you know why. Often you may be told that this is part of a package. Memberships for motor clubs, accidental death coverage and definite renewable life insurance are three policies that criminal agents sometimes sell to unwitting policyholders. Again, make sure you know what you want, and what you’re looking for. You should also look at a number of different brokers or websites to make sure that you are not paying over the odds.
Being a victim of any sort of scam is not pleasant, and when it comes to insurance it can be heart-breaking, especially if you find that you don’t have the coverage that you thought you did. Make sure that you do your research and know what you’re looking for before you begin the process of getting a policy and this, more than anything, will protect you from being the victim of a scam.
For home insurance, always use a reputable firm such as RIAS.
