Are You Being Ripped Off By Your Insurance Company?

On December 16, 2012

Drug LordInsurance companies came into being to offer security and protection to individuals who apply for it, with a monthly premium set apart for every month in case there are unprecedented emergencies or accidents. Unfortunately, insurance company scams are quite common in the current environment, especially with the impending economic crisis. The insurance providers utilize many techniques to get out of performing their responsibilities but charging high premium rates to rip off customers. It is imperative that customers thoroughly research their chosen insurance company before applying for a suitable offer. There are several ways in which insurance companies have ripped off customers in the past. Some examples are given below.

In car insurance, there is often a replacement or equivalent cash value policy for customers in case their car is damaged beyond repair. However, insurance companies are expert at law-balling the cash offers or offering a cheaper replacement through painting an imaginary picture of the vehicles previous condition. They are likely to opt out of paying the equal amount through coming up with petty excuses such as chipped paint on the car or dents. Additionally, they may base the equivalent price on a “comparable” vehicle rather than the actual vehicle itself. This might mean the comparable vehicle might have many thousands of miles on the clock which the insurance company does not take responsibility for.

Insurance companies have also been known to place high premium rates while making low deductible offers, meaning that more is going into their pockets than coming out of it in case of accidents. Renewal price for a totaled vehicle will often be more than the actual price customers pay, something that insurance companies hope customers don’t actually notice since there is absolutely no explanation or standard procedure for this.

In some insurance policies, travel insurance is covered within home insurance, that is, lost luggage is considered personal belongings thus may be covered within the home insurance package. Nevertheless, travel agents charge thousands of dollars yearly on unsuspecting customers for insurance, and do not inform them of the realities of where their money may be going. In case of lost or damaged luggage, airlines are legally obligated to provide coverage to their customers but there is still a huge charge on the final bill in terms of travel insurance. This is one of the most significant ways in which insurers rip off their customers. It has been statistically proven that unsuspecting customers spend about $1 billion every year through this method.

One of the worst tricks that insurance companies pull is to downplay the damage on homes caused by floods or fires. An example of this is when Hurricane Katrina struck Louisiana and Mississippi and home owners were turned away from insurance companies with the claim that their homes were only affected by minimal water damage. Since water damage isn’t included in the insurance coverage, the companies assumed they might characterize the damage this way and get out of paying, but after lawsuits were filed against them they were forced to pay up. In some cases, insurance companies encourage their employees to downplay the damage and repair costs in insured properties so they aren’t forced to pay the full amount.

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