A Cautionary Tale of Fraud (and How to Avoid Becoming a Victim)

As per Coalition Against Insurance Fraud, Americans are often victimized by fraudsters, with over $308.6 billion lost annually. This number unmistakably demonstrates that many are still out of touch with how insurance works and how to spot con artists. Fraud can be of any kind, and scammers take advantage of the fear the general public have with complex jargon and intricate procedures.

Surprisingly, people in their 20s and 30s are more likely to be duped by these scams. But they are not alone. Research shows that 1 in 18 senior citizens in the US too falls victim to financial fraud each year. The government has been very active in creating a fraud bureau and enacting legislation to make insurance fraud a crime. The risk can be reduced if we can spot these con artists’ tricks and avoid falling for them blindly.

Here is an example of a COI fraud that we discovered, along with advice on how to spot one if you ever find yourself in a similar situation.

What Is COI Fraud?

A COI, or certificate of insurance fraud, is a method of fabricating a fake document while using the name and reputation of a genuine insurance provider. In the digital age, it’s easy to modify templates to produce a fake certificate that looks authentic, something that is usually overlooked by people who have limited knowledge of how these certificates work. The fraud comes to light only when these insurance certificates need to be used to submit claims.

Let’s consider a scenario to understand it better.

Before the weather turns bad, you hire a contractor to complete some minor renovations. This business displays a document describing how they have liability insurance coverage from a licensed insurance company. The name and address of the company are included, the document appears to be accurate, and strewn with legalese.

If the hired company’s services fall short of expectations and cause damage to the service takers, insurance may be claimed to pay for the damage. However, in this instance, the business that was hired for the contract was not protected by any insurance policy, so even if the hirer contacts the business, they won’t receive any responses or claims. The back-and-forth communication between the two parties ends without satisfactory resolution.

Many people, including not a small number of contractors try to save money by not purchasing an actual insurance policy. They pursue such routes to save some money and generate higher profits. They know that they’re doing something that’s illegal and often do so with full knowledge.

But it’s up to the potential victims to be watchful and aware of the implications of COI frauds. The following section outlines some tips and tricks related to the same.

How To Avoid COI Frauds: Tips and Tricks

Here are the techniques our CEO, Chris Gonzalez, outlines as the most effective for identifying COI fraud.

Look for Consistency

Fraud certificates are frequently just modified Google templates, expired certificates with new dates, and altered certificates from others. These documents have many inconsistencies, including misaligned text, overwriting in rows, and font type and size issues. Owing to these inconsistencies, they might not exactly look professional. This assessment can be an excellent way to conduct the first-level check without consulting an expert.

Check the Mailing Address

These market-wide scammers frequently communicate with consumers via personal email addresses. In the real world, any official will give out their official email addresses, such as abc.xyz@companyname.com. It’s perfectly acceptable to have suspicions if you see an email with the generic @gmail.com or @outlook.com domain name at the very end. 

In addition, if a physical address is provided, you can easily cross-verify it to ensure its accuracy. These con artists offer a fake address for a rented mailbox where letters and other documents can be delivered. If you look up the listed company’s address online or otherwise, it is actually completely different.

Contact the Company Directly

Make a direct phone call to the listed insurance provider without hesitation. This may be your best chance to determine whether the certificate that was produced was legitimate or not. You can get assistance from insurance companies in determining whether or not the policy number listed on the certificate is even included in their database. You can also ask to speak to the employee of the insurance company listed on the COI as a contact for further reassurance. That said, calling the insurance agent is not a foolproof way to determine the authenticity of the business because they, too, may be a hoax partner. Check carefully into the company’s history and see if the insurance agent you are working with is even connected to it. 

Additionally, the representative check can be performed in a similar way for an additional layer of security throughout the process.

Authenticity Check

All insurance certificates are ACORD 25 certified, but despite being widely accepted across the nation, the certificate’s design hasn’t changed in years. As a result, it is difficult to verify the authenticity of these certificates by simply looking at the ACORD 25 logo and references because they can be easily copied from the internet. If a section of the certificate is unusable, it was probably created for a different policy with a different set of coverage options than those offered in the certificate presented to you. 

The best way to ensure its validity is to request a copy of the insurance policy certificate directly from the agent or broker. This helps authenticate the document and establishes the proper channels for communication in the event of claims.

At Gonzalez Insurance, we are aware of how upsetting these fraud circumstances can be. To prevent this, follow the above tips and only believe a reputable source that has been around for a while. 

Interested in our insurance offerings? Get in touch with us to receive a quote tailored to your specific insurance needs.