What is insurance fraud?
 
  What is Insurance Fraud?
  Insurance Fraud artists steal billions of dollars each year from hardworking Americans.  According to the National Insurance Crime Bureau, it is estimated that each household pays approximately $300.00 extra in insurance premiums each year to offset the cost of insurance fraud.
 
  Insurance fraud scams vary and more scams are created each year. Here are just a few examples:
  Arson-for-profit:
  An owner, or someone hired by an owner, deliberately burns a business, home or vehicle to collect insurance money.
 
  Disaster fraud:
  Unscrupulous operators persuade disaster victims (i.e. hurricane, firs, flood etc.) to claim more damages than actually occurred, or they collect money to repair damaged property but never complete the work.
 
  Exaggerated claims:
  The most common perpetrators of fraud are those who overstate their insurance claims to make up for the deductible.
 
  Falsifying theft reports:
  A property owner reports items stolen or exaggerates the value of items taken in a burglary to collect insurance money.
 
  Medical fraud:
  Unethical medical practitioners or providers work in concert with scheming patients to create fictitious accident-related injuries to collect on fraudulent disability, worker's compensation and personal injury claims.
 
  Sliding:
  An insurance agent sells an unsuspecting consumer much more coverage than is needed.
 
  Twisting:
  An insurance agent replaces a consumer's policy with a new, more expensive one without their permission and pockets the additional premium.
 
  Vehicle scams:
  Vehicle schemes may include intentionally causing an accident to collect money; fabricating an accident to make false police and insurance reports; an auto body shop offering to "Hide" the deductible or inflate the extent of damage; vehicle owner intentionally destroys car to collect insurance; and a vehicle owner uses another address or misrepresents other information to obtain a lower premium.
 
  Worker's compensation fraud:
  An employee falsely claims a work-related injury or exaggerates the extent of a minor injury to collect worker's compensation benefits.
 
  Consumers are encouraged to report insurance fraud activities to the Maryland Insurance Administration's Insurance Fraud Division at 1-800-846-4069. You need not give your name.
 
 

(Some information obtained from the National Insurance Crime Bureau website at www.nicb.com)
 
 

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faq
       

 

    
 
 

Auto Policy FAQs
 
  1. Can my insurance company cancel my policy if I gave inaccurate information on my application?
 
  2. Can my insurance company lawfully cancel or non-renew my policy for accidents or violations?
 
  3. Can my insurance company non-renew my policy because of accidents that were not my fault?
 
  4. Can my insurance company cancel my policy for late payment?
 
  5. What is the difference between a non-renewal and a cancellation?
 
  6. What happens if there is a lapse in my coverage?

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inaccurate
     
 
  1. Can my insurance company cancel my policy if I gave inaccurate information on my application?
  Yes.  Your company may lawfully cancel or non-renew your policy if you misrepresent certain information about yourself such as your address, driving record, accident history or fail to disclose all household licensed residents.
 
 

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for accidents
     
 
  2. Can my insurance company lawfully cancel or non-renew my policy for accidents or violations?
  Yes. but only under the following conditions:
  If within the past three years, you:
 
  • Filed more than two claims where you were not responsible or "not-at-fault" (e.g. theft, windshield damage or Personal Injury)
  • Filed more than one claim for an accident that you were deemed to be "at-fault".
  • Filed any combination of three or more at-fault accident claims or moving violations.
  • Were convicted of driving while intoxicated or impaired by drugs. ( DWI/DUI )
  • Were convicted of homicide, assault, reckless endangerment or criminal negligence arising out of operation of a vehicle.
  • Were convicted of using a motor vehicle to participate in a felony act.

 
  If within the past two years, you:
 
  • Have had your license revoked or suspended for a driving related violation.
  • Have had three or more moving violations.

 
 
 

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not my fault
     
 
  3. Can my insurance company non-renew my policy because of accidents that were not my fault?
  A company may cancel or non-renew a policy if you filed three or more "not-at-fault" claims within a three year period. Comprehensive and uninsured/underinsured motorist coverages are considered "not-at-fault" claims. However, Personal Injury Protection can either be "at-fault" or "not-at-fault," depending on the facts surrounding the particular claim.
 
 

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late
     
 
  4. Can my insurance company cancel my policy for late payment?
  Yes.  Your company can cancel you for non-payment of a premium even if the payment is just one day late.  However, some insurers have guidelines for late payments and may reinstate you when the payment has been made, but this is not a legal requirement.  The best practice is to pay your premiums before the due date to avoid being canceled.
 
 

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non renew
     
 
  5. What is the difference between a non-renewal and a cancellation?
  Insurance policies are issued for a specific term or period of time.  Companies will issue either a six or twelve month policy.  Non-renewal occurs when an insurer terminates your insurance coverage at the end of the policy's term  Cancellation occurs when an insurer terminates your coverage before the end of the policy's term.
 
 

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lapse
     
 
  6. What happens if there is a lapse in my coverage?
  Both Maryland and the District of Columbia have mandatory insurance requirements for motor vehicles with substantial fines for non compliance.  Your insurance company is required by law to notify the respective MVA anytime there is a lapse in your coverage. Details of the fine are located on the auto page.
 
 
 

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factorsd
     
 
 

Auto Rating Factors
 
  1. How do companies determine risk?
 
  2. I hear some companies use credit. What does that have to do with my car insurance? 
 
  3. I hear some companies use a "Tier" rating. What determines the "Tier" you qualify for?
 
  4. What are the basic rate factors most companies use?
 
 
 
 

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RISK
     
 
  1. How some companies determine risk.
  When you apply for auto insurance, companies evaluate the likelihood that you will file a claim. This is referred to as "underwriting" a risk.  Most companies rely on "Statistics" and "Actuarial" figures to determine risk categories.  Today, more and more companies have "tiers" ranging from Non-Standard (High Risk) to Elite (Highly Preferred).  Your driving history and claim history during the past three years are used to make this evaluation.  Maryland law prohibits a company from using anything beyond the three year period.  However, the three year rule does not apply to credit* history, which more and more companies are now using to evaluate risks.     
 
  * New rules that  govern how Insurance Companies can use credit went into effect October 1st. 2002 somewhat restricting how credit can now be used in the State of Maryland to determine the final rate for a risk.
 
 

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CREDIT
     
 
  2. What does credit have to do with your driving ability?
  While credit* may have nothing to do with how good of a driver you are,  insurance companies have learned that there is a direct correlation between a persons credit* history and the likelihood they will file a claim.  There are no scientific formulas used in the equation, but the actuarial facts are somewhat overwhelming and that's what companies look at.  Currently less than half of the "Standard" carriers are using credit* as an underwriting tool.  It has been predicted that within five years, more than two thirds of all "Standard" carriers will use some form of credit* as part of their underwriting criteria.   
 
  * New rules that  govern how Insurance Companies can use credit went into effect October 1st. 2002 somewhat restricting how credit can now be used in the State of Maryland to determine the final rate for a risk.
 
 

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tiere
     
 
  3. What factors determine the tier you may qualify for?
  Keep in mind that not all companies use the tier system and of those that do, the factors may vary slightly.  The most common are:
 
  • Ages of all drivers
  • Years licensed
  • Age of vehicle
  • Years of prior coverage (without a lapse)
  • Three year violation history
  • Three year claim/accident history
  • Number of not-at-fault accidents (some companies)
  • Credit* (some companies)
  * New rules that  govern how Insurance Companies can use credit went into effect October 1st. 2002 somewhat restricting how credit can now be used in the State of Maryland to determine the final rate for a risk.
 
 

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basic
     
 
  4. The following basic factors are used by most companies to determine the rate.
  Liability rates are determined by just a few basic factors:
 
  • Driver class (age and marital status)
  • Experience (years licensed)
  • Territory (usually determined by zip code)
  • Three year violation history
  • Three year claim/accident history 
  • Use of vehicle (Pleasure, to/from work, business)
  Physical damage rates are determined in part by the same factors as listed above, but with one more factor which is the "Vehicle Rating Symbol". This symbol is determined by:
 
  • Year of the vehicle
  • Make of vehicle
  • Model of vehicle
 
 

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