Studies show that every year many claims made by the adjuster are denied stating a barrage of reasons which all seem logical to a layperson and thus are easy means for the car insurance company to dismiss the claim. This behavior on the insurance provider's part is termed as 'insurance in bad faith.' Fraud car insurance is extremely prevalent in India and before we tell you how to avoid the same, it’s important to understand what fraud methods look like:
Signs You’re Dealing with Fraud Car Insurance
- Protecting oneself against actions taken in bad faith is not easy, as identifying them is a formidable challenge. While a straightforward refusal to pay your claim is more apparent to question, insurance providers often go down the sly path to avoid paying the claims. One prevalent way is to avoid the payment by delaying the investigation of the claim or blaming the delay on the processing time.
- Not relaying important information to the client when it comes may also be useful in dallying the process.
- Another example of avoiding the claim is to place an unreasonable demand to prove a loss covered within the car insurance policy terms.
- The insurers also attempt to thwart off the plaintiff by citing illegal negative repercussions like an increase in the premium henceforward or filing a lawsuit against the plaintiff. They might additionally try to misrepresent the terms of the policy for their benefit.
- Some take it even further and alter or cancel the policy altogether when the insured makes a claim. When coupled with keeping the insured in the dark about the policy limitations and exclusions, all these malpractices result in a monetary loss for the insured and an erosion of trust from insurance as a concept.
What Should You Do?
All this sounds very ominous and might lead car owners to forgo the vital step of buying an insurance policy for their vehicle for fear of losing the money paid as a premium for no accrued benefit. But foregoing buying insurance for your car is not the answer. Car insurance protects against sudden huge repair expenditures in case of an unfortunate accident. It also provides cover for medical expenses in case of injury or disability and some amount to the near family in death.
Another benefit is the protection against all kinds of third-party liability that arises out of the accident. The car insurance provider covers any monetary expenses pertaining to the injuries caused to the third party or any harm to their property/car.
Besides, the person may also choose to ask for cover against loss of use, downtime insurance, zero depreciation guarantee, no claim rewards.
Considering the wide range of perils, car insurance safeguards an insurance holder against them, we cannot emphasise enough the importance of buying car insurance.
Simultaneously, you need to take some simple but essential steps to shield yourself from becoming prey to the frauds committed by the insurance providers. Here are a few steps to protect you from these frauds -
1. Go through your insurance policy thoroughly
It is essential to go through all the documents provided by the insurer thoroughly before signing the policy. Every insurance policy should have the following sections; declarations page, insuring agreements, exclusions, conditions, definitions, and a segment on 'who is insured.' Let's understand this with the help of an example-Rumi purchased a comprehensive car insurance policy in 2021 and last month, she raised a claim request as her car met with an accident. She drove her already damaged car to the garage and informed her insurer about the entire incident. At the time of inspection, her claim was rejected because raising a claim request against consequential damage/loss is an exclusion. The insurance companies will reject your claim, in case you cause further damage to an already damaged vehicle. It would be considered as part negligence and is an exclusion mentioned in your policy document. Unfortunately, Rumi did not know about this and she didn't read her policy document carefully hence as a result she had to face this rejection.
Every insurance buyer should proactively ask for all of the above information in case it is missing. Also confirm the essentials like name or type of the coverage provided under the policy, the name of your organisation, the duration of the policy, the names or numbers of endorsements that are included in the policy, and the limits of coverage and associated deductibles.
Always ask for clarity from the insurer in case of ambiguity and try to be clear on as many details as possible.
2. Purchase policy only through the company or an authorized agent
Every authorised company and agent has a license number displayed on their website, provided by the IRDA or the Insurance Regulatory and Development Authority. To confirm if the license number is valid, cross-check it on the official website of IRDA. This way, you’ll know that you are dealing with a genuine company.
3. Utilise the free-look period to your advantage
The free-look period is a pre-specified time duration wherein the insured has the right to cancel the policy without any penalty. It is often a good idea to review the terms and conditions of the policy with your lawyer during this period to avoid any manipulative practices when the claim is made.
It is advised to ask the insurance company to provide full details in a written format during this period for the ease of providing evidence in case of a lawsuit.
4. Never forget about the premium payment receipt
The premium payment receipt is a document received by the insured on payment of the first premium. It contains all the terms and conditions of the policy upon which both parties have affirmed. It acts as proof of approval of the terms by the insurance provider and is quintessential in illegal alteration of policy made by the insurance provider. It also contains the details of the next payable premium.
5. Sign on the dotted line
Having your signature on the dotted line is of paramount importance. If the signature steers off the dotted line too much, it creates an opportunity for executing fraud by replacing that space with a fake signature after altering the terms and conditions of the policy.
6. Verification
You should always verify by searching for your vehicle number on the RTO website to see if the vehicle is insured or not in their data. The Regional Transport Office maintains a detailed database about all cars currently running on the road, including the insurance status. Every car insurance provider must provide the information on the insurance purchased from them for every vehicle to the RTO, which is a way to check the policy's legitimacy.
Summary
These steps can safeguard the policyholder against the most common frauds that occur. The bottom line is to stay vigilant against tyrants masquerading as public servants and to remember that the law is on your side.
