Experts say that repair people who offer to pay insurance deductibles with the intention of enticing consumers to sign contracts for damaged homes and cars open the door to fraud. In addition to this, the practice makes insurance premiums rise. These inducements will eventually result in poor business practices, and they will hurt most of the country’s insurance consumers. In some states, there are bills being considered that would classify inducements as insurance fraud. Many insurance companies, lawmakers and consumers encourage the passage of these bills in all states. Since rebating deductibles has become such a major problem in so many different areas, more than five states have already passed these types of bills in recent years.
Dishonest repair providers in home contracting businesses and auto body shops have often told unwary customers that signing contracts with the offer to pay insurance deductibles is acceptable. In most cases, this claim is an attempt to obtain new business and also bill the insurance company with a fraudulent request. Since the individuals who typically do these things are known for shoddy work, consumers also come out on the losing end of the bargain. In many cases, a repair person will exaggerate the cost of a project to cover the deductible. Insurers pass these inflated and fraudulent costs along to policyholders through higher premiums, so consumers are ultimately the ones who are hit the hardest.
Premium rebates can put a person’s safety on the line in many other ways. For example, a repair person who completes shoddy repairs on a consumer’s car could cause more than financial problems. If the shoddy repairs affect vital functions of the vehicle, the consumer and his or her family will be driving in an unsafe car. Serious accidents could happen, and some accidents have resulted in fatalities. Even if a consumer lived through an accident, he or she might still have to pay for medical expenses, lost time at work, vehicle damages and other costs associated with such an incident.
Honest repair businesses that refuse to offer inducements still face the competition of working against providers who offer more enticing prices. While they are not even similar in the quality of work provided, many consumers do not know this. For this reason, it is in the best interest of every small business specializing in contracting or auto repair to alert consumers about dishonest providers. As a rule, consumers should always remember that businesses performing quality work do not need to offer incentives for insurance-related work. Word of mouth is an excellent source of advertisement for these companies or individuals, so consumers should do their homework before selecting providers. For answers to any questions on these topics, discuss concerns with an agent.