Fake insurance policies: How to avoid buying one and what to do if you already have


A recent case in Florida involving the sale of bogus insurance policies has thrust the issue of fake insurance back into the limelight.

Read more: Insuring a home-based business: What you need to know

Ex-Miami insurance agent sentenced for phony policies

Mandy Rodriguez has been sentenced to prison for generating fake insurance policies, according to The Florida Department of Financial Services’ Division of Investigative and Forensic Services.

Rodriguez cooked up bogus quotes, certificates, insurance declarations and invoices for four consumers who thought they bought legit commercial or homeowner’s insurance policies.

The hapless victims were told to make their premium payments to Rodriguez’s personal corporation, Risk Management Agency Group, Inc., rather than to the insurance underwriter.

This case brings into focus a perennial problem in the insurance industry. Looking at just one sliver of the insurance market, the General Accounting Office of the federal government reports there were 144 fake insurers nationwide selling bogus health insurance between 2000 and 2002. More than 200,000 people took the bait and were left sitting with in excess of $252 million in unpaid claims.

Know the warning signs of fake insurance

Spotting a fake insurance policy isn’t that hard to do. You just have to know what to look for!

If you have a doubt about an insurance agent, the first thing to do is check their licensing by contacting your state’s insurance department. The National Association of Insurance Commissioners (NAIC) maintains a state-by-state listing to help connect you with your department.

In addition, the NAIC recommends you familiarize yourself with these hallmarks of fake insurance policies:

  • Aggressive agents or brokers who pressure you for a same day sale and threaten that premiums will rise if you don’t sign then and there.
  • Premiums that are more than 15% to 20% lower than other companies’ comparable coverage.
  • There is no listed phone number for the insurer or you experience other difficulty in reaching them by phone when calling with a routine question.

Meanwhile, CarInsurance.com says to be on the lookout for the following:

  • 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

The NAIC has a uniform fraud reporting system that consumers and insurance departments can use to electronically report suspected fraud to the appropriate insurance department. You may use the system to report anonymously.

Read more: The real reason why your insurer may not renew your policy

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