Did you buy fake car insurance?


No wonder people fall for fake car insurance scams.

When everyone else asks for thousands of dollars to provide a little piece of paper that allows you to drive legally, the guy who asks for only hundreds seems like a saint.

Until you have to file a claim. Or get stopped by a cop.

Actual statistics are hard to come by, but these bogus auto insurance agents and companies scam drivers across the U.S. and in other countries every day. They fleece the public by collecting premiums for coverage from a company that doesn’t exist and will never pay out after a claim.

“Fake auto insurance is probably more prevalent today than in the past,” says CarInsurance.com consumer analyst Penny Gusner. “Individuals now have the means to Photoshop fake insurance cards, and the Internet allows scammers to reach desperate people more easily.”

How common is fake insurance?

In January, the Michigan Office of Financial and Insurance Regulation (OFIR) warned Michigan drivers that they may have purchased fraudulent auto insurance certificates from an unlicensed insurance agent. OFIR ordered Mervin Graber to stop conducting unlicensed and fraudulent insurance through his company, Tennessee Christian Motorist Aid.

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The Detroit motorists who fell for the scam face car insurance rates that are among the nation’s highest. Even good drivers in some ZIP codes could face bills that top $4,000 a year.

“Any driver who purchased this fake auto insurance through Mr. Graber needs to purchase legitimate coverage immediately,” OFIR Commissioner Kevin Clinton told Michigan drivers. “Right now they’re driving without insurance.”

The U.S. isn’t the only place these auto insurance scams are taking place.


In Great Britain, fake car insurance brokers known as “ghost brokers” — operating through websites and taking out small newspaper ads — defrauded British drivers by offering cheap car insurance, and the result was that 20,000 motorists in Britain ended up driving around uninsured.

A note for the do-it-yourselfer

An insurance card can be faked, either on paper or electronically. Many folks try it. But you can’t outrun the Internet. States are rapidly adopting real-time electronic verification systems that check for a current policy in seconds. (See “Proof of insurance: Paper or plastic?“)

Even in states without a real-time verification program, occasional sting operations will check every driver stopped during the course of a day, for example. Insurance companies stand by to verify information by phone.

Don’t expect a warning.

“It’s not a question of ‘please don’t take me’,” Broward Sheriff’s Office Deputy Robert Boris told NBC 6 in Miami last fall. “If you’re fraudulently changing your insurance card, you’re going to jail.”

Instead of a ticket or a license suspension, you could face prison time for a fraud conviction. In Nebraska, for example, fabricating an insurance card is a felony punishable by up to five years in prison and/or a $10,000 fine.

Is there a company behind that insurance card?

The difference in price between legitimate insurance companies can be thousands of dollars, especially for high-risk drivers. A price that’s dramatically lower than the rest — especially from a company you might never have heard of — warrants a little checking.

First of all, says Gusner, “if a deal sounds too good to be true, it probably is. No one will write a policy for $500 a year if every other quote you’ve heard is for $5,000.”

She also offers these other red flags:

  • Misspellings in any paperwork that you’re given by an insurance agent
  • An offer of insurance from anybody who knocks at your door
  • A demand for payment in cash or with a money order
  • No documentation or ID card provided
  • An agent willing to backdate your policy

If you are in any way uncertain, get the license number of the agent and make certain that the license is real. You can look up the license records at your state department of insurance. (You can find a link on your state’s insurance profile page.)


Also, check out the insurance company’s rating online with A.M. Best to make sure it has the financial strength to pay out any claims — or if it exists at all.

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