Having travel insurance when you plan a trip is always a good idea. Unfortunately, recently travel insurance scams and frauds are on the rise and many people are victims of these crimes.
What Is Travel Insurance Scam?
Individuals who commit travel insurance scams will con people out of their money by “selling” them invalid travel insurance policies. There are several types of travel insurance scams. For example, someone might try to sell you fake insurance from a fake company, or you think you bought insurance from an agent claiming they work for an actual, reputable travel insurance company. So, you give them the money, but they never actually register you for travel insurance and pocket the money for themselves.
Travel Insurance Scam: What to Look for?
Knowing what types of several insurance scams are out there makes it easy to spot them and stay clear. So, here are some of the most common travel insurance scams:
- Fake policies.
- Fake add-ons.
“Ghost-Broker” Insurance Scam
“Ghost-broker” usually refers to an insurance scam where individuals pose themselves as licensed insurance agents, claiming to be selling insurance plans on behalf of a reputable company. The company they claim to be working for might exist, but they have no relationship with the insurance provider. Or they may entirely fabricate a company. Either way, “ghost-brokers” will show their credentials and the policy information, which are all fabricated.
In this type of scam, “ghost” agents usually promote their work on social media and contact their clients via those social media. Their clients will pay for the travel insurance policy, while the agent keeps the money for themselves without purchasing the insurance on behalf of their clients. Then, when clients file an insurance claim, they discover that they don’t have valid insurance with that particular company or that the provider does not exist at all, while the ghost agent has disappeared with their client’s money.
Fake Policies Scam
A fake travel insurance policy scam it’s just as it sounds— the whole policy, company, and agent, are all fabricated by an individual or group of people. These individuals will make it seem like their entire insurance business is legitimate; they will go as far as faking licenses and underwriters, making it difficult to spot them. As a result, people will pay for a travel health insurance plan only to find out their insurance is invalid and the insurance company does not exist— leaving them uninsured and with massive amounts of money to cover the loss or incident they experienced.
Fake Add-ons Scam
One common scam with travel insurance is you will see some “agents” offering you a coverage plan with add-ons as main policies. For example, legitimate travel insurance companies provide the “cancel for no reason” benefit to their travel insurance. However, this is usually an add-on to a basic travel insurance plan, and it’s limited based on the reason for your cancellation.
So, if you see someone offering you a stand-alone “cancel for no reason” policy that covers all types of trip cancellations, be aware of red flags and think twice before buying with that company. This particular scam has become more popular after the Covid-19 pandemic began since most travel insurance companies previously did not cover canceled trips due to a pandemic.
These scams are usually emails or calls from individuals claiming to offer discounts or better coverage than you already have. The emails, calls and the information you get are all fabricated to make it seem like they are legitimate travel insurance providers. They will ask you for your personal data— do not give any of your information to these emails or messages. Verify the email is from an actual insurance company.
Tips to Avoid Travel Insurance Scams
Knowing what types of scams there are is not enough to avoid travel insurance schemes; you still need to keep in mind some helpful tips:
- Check the insurance company. The first step to avoiding travel insurance scams is to verify the insurance company and the agent selling you the insurance. One common way you can verify the legitimacy of an insurance company is by using the online forum A.M. Best Website to check a provider’s ratings— you can find the A.M website here. You can also use your country’s insurance department to see if the company is licensed. For example, suppose you are in the US. In that case, you can check the U.S. Travel Insurance Association Web (USTIA), or if you are in Canada, the Canadian Insurance Services Regulatory Organizations (CRISCO) database.
- Be wary of the price. When you buy travel insurance, you’ll notice the policy is not primarily expensive because travel insurance is rarely needed when you travel. Nothing happens on your trip most of the time, so if you see a very cheap travel insurance policy, be wary of the price and check out why it is so cheap.
- Take note of the words. Read the policy and fine print carefully, and take note of the phrases and words. For example, do not purchase the policy if your policy uses “trip protection” as a term instead of travel insurance. Trip protection is usually not regulated by your state, while travel insurance is. Scammers can use these terms to confuse their clients and make it seem they are selling travel insurance.
- Research the insurance coverage. Do a lot of research and find out what a basic travel insurance plan includes and the benefits. If you see an insurance plan that offers unusual benefits or notice something suspicious, double-check the agent, the provider, and the underwriting.
- Shop around. Don’t buy the first policy you see. Instead, do a lot of research, check out the different types of travel insurance, find out what you need in your coverage plan, and compare other insurance policies. Remember; if it’s too good to be true, it’s probably not.
What to Do in Case of Travel Insurance Scam?
You must remember that scams have become more elaborate, creative, and challenging to spot lately with online travel insurance companies. So, sometimes no matter how careful you are, you might just fall prey to a scam. Contact the authorities and report the crime if you experience a travel insurance scam. Also, make sure to bring any documents, papers, or signed certificates related to your insurance purchase. Unfortunately, in most of these schemes, the money you paid is rarely retrieved, but the person responsible for the scam may be held accountable for their actions.
Travel Insurance Fraud
Travel insurance fraud happens when an individual tries to make false claims with their insurance company. This is different from insurance scams when you are the one being cheated out of insurance money. People who commit travel insurance fraud try to obtain money from their providers for losses or accidents that did not occur. Please note that travel insurance fraud is illegal, and if you get caught trying to file a false claim, you may be arrested.
If you don’t know how to file an insurance claim correctly, you may commit unintentional insurance fraud. To avoid this from happening, contact your 24/7 insurance claim hotline to get help from your provider on how to file a correct claim.