So you’ve bought your auto coverage policy. Your trusted agent and you suss out the details, you’re out the door, then on the road expecting to be a legal driver.
Then you find out that policy was invalid. What’s worse, your trusted agent didn’t even have a license to sell coverage.
A scary scenario, but one that played out in Michigan last month when state regulators there issued consumer protection bulletins about Shaker Uddin Sadeak and Al Baraka Enterprise, a licenseless agent and firm that sold “bogus certificates purporting to have coverage” for vehicles.
For the Detroit-area consumers who were fooled into buying from Sadeak, the state’s insurance commissioner Kevin Clinton had a sobering message: “Right now they’re driving without insurance.”
So how does a consumer avoid such traps? And how does a consumer validate his or her choice of agent?
Three Words: Research, Research, Research
Clinton also said that it’s up the consumer to “do their homework and use every available resource” to nail down what they want in an insurance agent and what that agent’s background is.
In short, consumers need to research their choice of agent themselves. The more exhaustive the search, the better chance you have of knowing what kind of business you’re getting into; but fret not, there’s a lot of help out there.
Your average Web surfer can identify an agent’s license (or lack thereof if that agent doesn’t have one—a big red flag) through any of your state regulators’ licensee searches.
For example, let’s say that you’re considering purchasing coverage from a California insurance agent named Maria Balandra. Visit the California Department of Insurance’s (CDI) “license status inquiry” system, click on “Name search,” input her last name (make sure it’s only the last name), pull up her agent history and—waddayaknow—we see that her license as a casualty/property agent expired on Oct. 31.
But let’s dig a bit deeper by visiting the state regulators’ “formal enforcement actions” page, where, after searching for her last name and following the links, you’ll find that Balandra was barred from the insurance practice after eight counts of various criminal charges were brought against her in late August.
Digging even deeper could send you to a search engine, where inputting Balandra’s name will likely bring up a few news articles along with an informative press release from regulators about Balandra’s arrest on counts of grand theft and burglary. According to the September release about her specific case, regulators allege that Balandra withheld portions of clients’ premiums that were marked for insurers and used them for herself, collecting almost $9,500 between 2008 and 2010.
“Investigators discovered that victims would go to the office and pay Balandra for a year’s premium on their home or auto policies, and in turn she would make small payments on the policy and allegedly keep the remainder of the premiums,” the CDI said in a statement about the Balandra case.
In other words, that’s a bad choice for an agent. Whew, crisis averted.
In another instance, say you’re a Florida resident who wants to check out the background of Richard Incandela, a life insurance salesman. It’s a simple lookup through OFIR’s “licensee search,” which will return no results for any Incandelas of that name. The verdict? No license, no sale. (Turns out this particular Incandela came up empty in the search because he didn’t even have a license and was convicted of collecting life insurance premiums for personal use.)
Going straight to your insurance department is also helpful. Regulators across the U.S. are there to answer any questions about car insurance claims, licensing, and validity of agents, brokers, and insurers of all different sizes. They also offer “indexes” that run down the complaints that are filed against insurers, so you can see for yourself if you think you’ll have your insurance needs met.
So, to review: Use license searches from state regulators, research (then do it again before doing some more), and ask your state regulator if you have any remaining questions.
Things to Keep in Mind
Agents are required to display their licenses in Michigan, so consumers should feel justified in asking for a copy, though it’s always best to then verify it through the database.
The OFIR offers the following recommendations and things to consider about your selection of agent:
—Referrals: Nothing’s more trusted than a trusty source, so go to family, friends, and the like who could know a surefire agent that is tailor-fitted to your needs.
—Customer Service: If you “have conversations or meet with prospective agents,” according to the OFIR, you’ll get a better handle on how that agent will treat you and if that treatment is good enough for you.
—Licensing: An agent should be licensed in the state you’re want that policy to be in, so ensure you’re not getting a worthless policy from a license-less agent.
—Complaints: Requesting regulators’ records on a company will get you their complaint record, which illuminates what kind of company they are and if you want them as your coverage provider.
—Financial Strength: Nobody wants to lose their coverage because their provider went under. Check with reputable consumer advocate agencies like the Better Business Bureau and A.M. Best to see if your choice of insurer has a strong financial backbone.