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Auto Insurance Referral Scams
Scams relating to auto insurance can take many forms and they all cost you money
Scams relating to auto insurance can take many forms, but they all have one thing in common - they cost everyone!
All policyholders end up paying for inflated or improper payments associated with an insurance claim. That means
you end up paying for someone else's greed! By being an informed consumer, you can help eliminate these scams and
help to keep auto insurance premiums from escalating even higher. We hope the following provides tips on how to
avoid auto insurance scams, and also help to eliminate them.
How Auto Insurance Referral Scams Work
A tow truck driver may be paid a referral fee by an attorney to refer accident victims to them. This is illegal. An attorney may be paid a referral fee by a health care provider to refer accident victims to them and this too is illegal. A tow truck driver may be paid a referral fee by a vehicle repair or body shop to have damaged vehicles towed there. These types of tow truck drivers are known in the industry as "chasers." A tow truck driver may be breaking the law by recommending a repair shop without being asked and especially if they receive a kick-back for making the referral.
Many "chasers" are owned or controlled by vehicle repair shops. Insurance companies may choose not to do business with these shops. If the insurer does not deal with the shop to which your vehicle has been towed, your vehicle may need to be towed to another repair shop. But before that happens, you may be required to pay for the towing service, storage and possibly other administrative fees. These fees can add up to hundreds or even thousands of dollars, and your insurer may not cover these fees. If you refuse to pay them, the vehicle repair shop can apply laws (different in most states) governing storage and towing fees and place a lien on the titil of your vehicle and sell it to cover the fees. To recover these referral fees, attorneys, tow truck drivers, repair shops and health care providers will most likely "pad" their bills. In the end, you and other policyholders end up paying.
What Can You Do to Fight Car Insurance Scams?
Be informed. If you require the services of a tow truck driver, attorney or health care provider, know your rights. Here are some tips:
Tow Trucks
- Make sure the tow truck has a legitimate license to operate before you use its services.
- Look to see if the tow truck is affiliated with a reputable company such as AAA or other automobile association.
- Ask if the tow truck has a contract with local, county or state law enforcement agencies.
- Listen for obvious clues. Does the driver recommend a particular repair facility without being asked? If he/she does, this might be an indication that a referral fee arrangement exists.
- Carefully read everything the tow truck driver asks you to sign.
- Ask that your vehicle be taken to a secure location where an adjuster or appraiser from your insurance company can have access to it.
- Contact your insurance company, if possible, for information on towing and where to take your vehicle to be repaired.
- Consider having your vehicle towed to a preferred vehicle repair shop. Some insurance companies use preferred repair shops where they have an agreement that guarantees your vehicle will be repaired to the highest possible standards. For more information, contact your insurance company.
Whom To Contact if you suspect Auto Insurance Fraud
If you suspect fraudulent activity, please report it to your insurance company or to your state's Insurance Commissioner.
Attorneys
- Make sure any attorney you are referred to is actually an attorney and licensed to pratice law in your state.
- Ask them up front what their rates are and what their plan is for your situation and how it will benefit you to use them.
- Check with Your State's Bar Association for any negative reports against them.
Health Care Providers
- Are they licensed to perform health care in your State?
- What are their charges and will they accept payment from your auto and health insurance companies and not charge additional fees above that.
- Check with your State's Medical Board for any reported malpractice.
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