Types of Auto Insurance Frauds in India: All You Need to Know

Imagine getting a call from an agent offering you an auto insurance scheme at surprisingly low premium rates. You find it a good deal and go ahead with the purchase. Then, fast forward to a few years later, when you raise a claim for your auto insurance, you don’t get reimbursed. Unfortunately, that means that you’ve been scammed.  

Scams are becoming increasingly prevalent in almost all sectors of the economy, with fraud in auto insurance being no exception. It has been said that about 90% of such deceitful acts rise from claims padding, i.e., when policyholders exaggerate the extent of damages, injuries, etc., and sometimes even go as far as adding false passengers’ sufferings to their auto insurance claims.  

 The remaining 10% is even worse, with scammers staging an entire accident just to extract huge amounts of compensation from their respective insurance providers. In such planned hoaxes, innocent motorcycle, truck, and even bus drivers are targeted through rear collisions just to raise hefty claims afterward.  Surprisingly, there exists another kind of auto insurance fraud wherein unsuspecting policyholders are scammed by fake agents and hoax insurance schemes. 

With that being said, have we struck the curiosity cord in your brain? Are you eager to learn more about auto insurance scams and how to not fall prey to them? Let us walk you through them.  

Types of Auto Insurance Scams: 

1. Against the policyholder

Fraudulent insurance agents and agencies pretending to be genuine insurance providers often dupe naive people into purchasing nonexistent insurance plans. These scammers entice people by presenting them with too-good-to-be-true premium rates to loot them.  These victims remain in the dark about the authenticity of their said insurance schemes until they submit their claim, only to realise that the whole scheme was a big fraud.  

2. Against the insurance provider

Companies that provide auto insurance are tricked by fraudsters, who indulge in the aforementioned practices of claim padding and accident staging. Sometimes, such shady policyholders purposely hide their car and then raise a claim stating that it has been stolen.  

Plotting and executing auto insurance fraud is punishable by law. Under the Indian Penal Code, these crimes will be dealt with as forgery, cheating, fraudulent acts, etc. 

How to Avoid Falling Prey to Auto Insurance Scams

1. Avoid shady agents at all costs 

It is highly advisable that you avoid transacting with agents, especially those who call you up and offer irresistible auto insurance offers. Instead, it will be a lot safer if you directly contact insurance-providing companies and enquire about their respective auto insurance plans.  

2. Verify the insurance plan before purchasing 

Before finalising a scheme, be sure to check the insurance provider’s official website and read all the auto insurance plan details, read through its inclusions and exceptions, and, if possible, even go through reviews written by customers that previously purchased the insurance scheme.  

 3. Collect receipts for premium payments

A premium payment receipt counts as proof of transaction, which you can show to the police and other law enforcement authorities in case you get scammed. Thus, it is important to always ask for and hold onto such receipts.  

 4. Avoid purchasing insurance schemes from sketchy companies

Just like fraudulent agents, sketchy insurance companies exist too. They might get in touch with you via SMS, email, etc., to dupe you. Therefore, you must always be cautious while purchasing any insurance scheme and stick to buying plans from only authorised and well-known insurance providers.  

 5. Never sign blank cheques/ documents 

Con agents and companies often try to get you to sign blank cheques and documents, to misuse them and the signature later. Thus, to avoid such troubles, you must avoid signing them at all costs.  

As an insurance buyer, it is imperative that you follow the tips mentioned above to avoid falling prey to such vicious and planned hoaxes.  You may check out the Bajaj Markets app or website, as we have multiple verified auto insurance plans for you to pick and choose from!