Cheap Car Insurance Scams to Watch Out For

Photo Courtesy: kite_rin/

For many people, finding the best deal on car insurance is a must. The average policyholder pays $1,553 annually ($129.42 monthly) for coverage, and while that works for many households, it’s more than others can afford. The issue is that finding a low price is tricky. Many cheap car insurance scams advertise incredible prices to lure you in, only to pull the rug out from under you after making off with your money.

Whether you’re among the 12.6% of drivers that aren’t insured and are searching for a new policy or are simply looking for the best deal on auto insurance, keeping an eye out for car insurance scams is essential. Here are some cheap car insurance scams to watch out for, allowing you to remain safe while shopping for an affordable policy.

Common Scams to Avoid

Robo Calls

Generally speaking, it’s best to treat any solicitation delivered by a robocall as a scam. Fraudsters frequently use robocalls hoping to connect with a person who will think the deal is incredible but assume it’s legitimate. Then, they’ll gather personal information on the call recipient to use for identity theft purposes or require a payment that gives them access to financial information they can exploit.

If you receive any robocalls, don’t provide any personal or financial information. Instead, hang up immediately. Then, if you want to see if the offer is legitimate, head to the main website of the company the caller claimed to represent, find a contact number, and reach out that way. By doing so, you can make sure that you’re speaking with an actual company representative, and they’ll be able to tell you if anything stated in the first call was legitimate.

Fake Agents

Fake agents – also called “ghost brokers” – are individuals that position themselves as insurance agents when they actually aren’t. Usually, they connect with people online, such as through websites or web ads that a person clicks. However, some may cold call potential targets. Often, they advertise incredibly low rates as a means of drawing people in before scamming them.

Typically, this scam unfolds in a specific way. The fake agent says they’ve designed a policy with a legitimate insurer, even offering up documentation that looks real in some cases. Then, if the vehicle owner moves forward, the fake agent begins collecting a monthly payment that they claim goes toward premiums. The issue is that the policy doesn’t actually exist. Instead, the scammer is keeping the money, and the driver has no legitimate protection. Often, policyholders don’t know the policy isn’t real until there’s an incident and they need to file a claim, only to find out they don’t have any form of coverage. 

Too-Good-to-Be-True Pricing

In many cases, if the pricing for a policy is too good to be true, it should automatically give you pause. Even if the policy technically exists after signing up, it may offer coverage levels far below state minimum requirements. As a result, you could find yourself underinsured even with a policy, and that can come with significant financial consequences if you’re at fault for an accident.

Tips for Avoiding Scams

Avoiding cheap car insurance scams isn’t inherently challenging. First, if you receive unsolicited calls or emails, assume those are scams. Scam robocalls and spam emails talking about cheap car insurance are common, so it’s better to hang up or not reply and contact the company directly using a number you find through the insurer’s website (not by clicking a link in an email you receive) to confirm whether it’s legitimate.

If you find information online about an agent or unfamiliar insurance company offering low rates, research them before engaging in any way. See if agents are associated with a particular company, look for reviews online (other than on their website) when you’re evaluating agents or insurers, and take similar steps to ensure their legitimacy.

Finally, any policy that is significantly below the average price – either nationally or in your state or region – is potentially a scam. Prices substantially below the average usually indicate a scam or incredibly subpar coverage. As a result, treat surprisingly low quotes with skepticism.