Watch out for fake motor insurance policies

Besides fly-by-night operators, pollution testing centres had also been found selling fake policies to obtain other vehicle papers

Most known insurance frauds are usually about the insurance company being defrauded by customers. Saying a white lie about your high blood pressure in a health insurance proposal form, or allowing your garage to exaggerate the accident damage to your car in the claim form are common unethical practices. The insurance industry has suffered because of it and it comes back to roost as higher premium rates for everybody in the long run.

Fraudulent documentation, misrepresentation of material facts, inflated claims, fake claims and moral hazard — the act of buying insurance under false pretences in order to make a claim — are well-known insurance frauds. More complicated frauds involve buying multiple policies on the same property, which is then destroyed for making a claim, policies being taken on non-existent properties or over-valuation of a property for enabling a higher cover and hence a higher claim.

In this column, let us see examples of a different type of fraud. How you, the insured, can be defrauded, or used to perpetrate fraud on an insurance company.