How to spot an Insurance Scam:
1. They don't ask for a survey
, even if the boat is over 10 years old
2. They don't ask for a survey
for a ferro-cement or wood boat
3. They are willing to insure a boat that no other company will insure
4. They ask few, if any, questions about your experience.
5. The main things they ask for are: boat name & description, navigation
, address, and how would you like to pay for that? In other words, just enough to print up a certificate for you. If you can pay, you're approved!
6. You documents don't list "security provided by" anywhere on them. This is standard on all insurance
polices, UK, US or anywhere in the world.
7. Their answer to the question, "What is the name of the insurance company covering my boat?" is evasive. It's often answered in vague references
to Lloyds, without actually ever committing that they are a Lloyds syndicate (because they are not).
8. Whenever you call their office, you often talk to the same person- for sales, claims, customer service
. Since they are just a paper mill, they don't need a lot of employees.
9. They are not able to tell you what the rating of the insurance company is, since it's not rated.
10. Their rates are usually significantly lower than what is charged by other A-rated reputable companies.
How does the fraudulent agent scam you?
1. They approve a lot of high risk boats for coverage and put most of the premiums in their own bank account, without forwarding it on to any insurance company. This is illegal, of course- all premiums must be forwarded on to the insurance company.
2. They print up a certificate of insurance document that looks official, but has no financial backing whatsoever, and send it to the "insured".
3. They may actually buy a few legitimate policies for some insurable boats - but not many of them.
4. When a claim is filed, they first check to see if it's one of the boats that actually has a legitimate policy. If so, they file the claim with the insurance company.
5. However, if the boat is in the majority that are not covered by a legitimate policy, then they come up with a reason to deny the claim, especially if it is a big claim.
6. If the claim is very small, like a few $$ for a stolen dinghy
, they might even pay on a bogus policy out of their pocket, just to keep the scam going.
6. So a few customers are pleased, since their claims were paid, and they say nice things about the agent on various web forums
, which helps perpetuate the scam.
7. However, when enough people have claims denied, a government
investigation ensues. This takes a while.
8. Meanwhile, the agent keeps selling bogus polices & boat owners go on filing claims and getting denied.
9. When the pressure from the investigation finally gets to be too much on the fraudulent agent, they pack up and move to another country, change the name of their company (sometimes not by much), and start over again, leaving their "policyholders" from the old company in the lurch.
10. Or they go to jail, as one did in the UK a few years ago.
I ask forum members to not post the names of any specific insurance companies or agencies on this thread, as I don't want this to turn into a witch-hunt. It's just a list of things to watch out for and an explanation of how the Ponzi scheme works, so that we as consumers can be more aware and make informed choices.