Insurance Agent Fraud: How a Corrupt Agent Can Cost You

Insurance Agent Fraud: How a Corrupt Agent Can Cost You


Car insurance agents are here to help you, right? Well, usually. Most insurance agents are professionals who are looking to make a commission, and their reputation is their livelihood. A few bad apples, however, mean you need to be vigilant about who you work with.

Corrupt agents can cost you thousands of dollars if you don’t know any better. There are a number of unscrupulous techniques that dishonest agents can use to gouge you if you don’t vet them carefully. Here are the main ways agents can commit insurance fraud.


The most direct form of insurance agent fraud is called “pocketing”. In this form of fraud, the agent signs someone up for an insurance policy on paper, gets their payment information, and collects money. However, in reality, the agent never files the policy’s paperwork, meaning the victim is not actually insured. Instead, they’re just paying the agent for no reason.

The agent, in turn, pockets all of the money. This scam can be hard to detect, especially for good drivers, because it doesn’t become apparent until you need to make an insurance claim. Often, in these cases, the scammer was using a fake name and isn’t actually involved with the company they claimed to represent.


When you discuss the kind of coverage you need with your insurance agent, you’re likely to go over what exactly you need given your income level. You’ll agree to certain coverages, often including only the things you can afford, to hit a target bill amount that works best for you. An unscrupulous agent cant add extras on top of this, however, increasing your coverage amount to up their commission.

This practice, known as sliding, is often done by otherwise legitimate agents. Using this tactic, the agent pads their own money by charging you more than you’d actually like to be charged. While you are technically getting the coverage you’re paying for, you’re paying more than you should be thanks to the corrupt agent.


The tried-and-true scam of phishing is also always a factor when dealing with people who will see your personal information. Often, otherwise legit agents might have a side business where they sell sensitive information like social security numbers, birthdates, and addresses to scammers who will use the information to commit identity theft.

To avoid these scams, do your research. Don’t sign agreements when you’re being pressured or rushed. And, above all, make sure you check around and find out an agent’s reputation. If you can’t find any information on an agent, that’s a red flag: every insurance agent lives by their reputation.