Auto insurance scams can take many different forms and all of them can cost you a lot of money. All policyholders end up paying a lot of money for overpriced or improper payments related to an insurance claim. This means that you end up spending a lot of money to satisfy someone else’s greed. By being an educated consumer, you can help minimize these scams and prevent auto insurance premiums from skyrocketing. In this article, we provide tips on how to avoid auto insurance referral scams and how to get rid of them.
How do car insurance referral scams work?
A tow truck driver can get a finder’s fee from a lawyer to refer victims of a personal injury car accident to them. This is illegal. A lawyer may be on a healthcare provider’s payroll to refer personal injury victims to them, and this is also illegal. A tow truck driver can get a finder’s fee from a bodyshop to have damaged cars brought there. This too is a crime. In the insurance industry, these tow truck drivers are called “pursuers.” It may be illegal for a tow truck driver to refer an accident victim to a particular repair shop without being asked, especially if they receive a finder’s fee for making the referral.
Many bodyshops monitor or own “pursuers.” It is up to the insurance companies to choose not to do business with these stores. If the insurance company does not recognize the workshop where your car was towed, your car may need to be taken to another coachbuilder. Before this happens, you may have to pay the towing fee, storage fee, and perhaps other administrative costs. These costs can run into the thousands of dollars, and your car insurance may not cover everything. If you don’t want to pay, the body repair shop can hold your vehicle in accordance with state laws and charge you storage and towing fees, and place a lien on your car and sell it to recover their fees. To recover these referral fees, lawyers, tow truck drivers, doctors, and hospitals and auto repair shops will most likely inflate their bills. Ultimately, it is you, the policyholder, who pays through the wazoo.
What can you do to prevent car insurance scams?
Be well informed and educated. If you need the help of a personal injury attorney, tow truck driver or doctor, learn everything there is to know about your rights as an accident victim. Here’s some advice:
- Make sure the tow truck service is legally licensed to operate before hiring their service.
- Verify that the tow truck service is associated with a reputable company such as Triple A (AAA) or another automotive organization.
- Verify that the tow truck service has a contract with local, state, or state law enforcement agencies.
- Listen for obvious red flags. Does the driver recommend a particular repair shop without being asked? If he does, it may indicate that he has a financial interest in that repair shop.
- Be sure to read the fine print on the contract or service invoice that the tow truck driver asks you to sign.
- Ask the driver to take your car to a safe location where your auto insurance company’s insurance adjuster or appraiser can assess the damage.
- Call your auto insurance company right away for information on towing services and where to get your car repaired.
- Consider having your car towed to a preferred bodyshop. Some car insurance companies use preferred repair shops where they have a mutual agreement that guarantees that your car will be repaired to the highest possible standards. For more information, please contact your auto insurance company.
Who can I call to report auto insurance fraud?
If you believe you have been a victim of auto insurance fraud, report the incident to your state’s insurance commissioner.
- Make sure that the attorney you are being referred to is licensed to practice law in your state.
- Ask them in advance what their rates are and what their payment plan is for your situation and how it will benefit you if you hire their service.
- Contact your state’s bar for any complaints about them.
- Ask if they are licensed to practice as a healthcare professional in your state.
- Ask how much they charge for their services and if they accept payments from your health or auto insurance companies and don’t charge anything else.
- Check with the healthcare provider’s licensing authority to see if any complaints have been filed against them.
There are many forms of consumer fraud today. It’s up to you to educate yourself on what is or isn’t legit. Hopefully, our advice minimizes your chances of becoming a victim of auto insurance referral fraud.