Is Purchasing Online Home Insurance Risky?

Online home insurance is, as the name implies, home insurance that can be purchased online. It allows homeowners to buy insurance at their own convenience, without having to schedule appointments and visiting the insurance providers in person. However, shopping for insurance online also increases the risk of fraud. There are several steps homeowners can take to reduce the risk and find an online home insurance policy that’s right for them.

Common Types of Fraud

Internet offers a number of advantages to scammers. It allows them to remain anonymous, create web presence in the matter of hours, put up a convincing façade and take everything down in minutes should things go south. Some of the most common home insurance related online schemes include:

Imposter websites – the scammers create a website that promises coverage from what seems like a reputable insurance company. It will have the company’s logos and all of the company’s information. In many cases, they would buy a domain name similar to the one used by a legitimate company (for example, if the original company’s web address was ”,” they would use “ The best way to avoid this scam is to look up the company on a search engine – the real website will come up first.

Sale of worthless insurance – the scammers sell homeowners a policy from what they claim is an insurance company. As soon as the homeowners try to use their policy, they discover that it’s worthless and the insurance provider they bought it from doesn’t really exist.

Insurance-related pyramid schemes – the scammers offer a number of incentives, including an insurance policy, to get homeowners to join their organization. In order to join, homeowners must pay a fee. New members are told that if they sell memberships to others, they can borrow money against their insurance policies and use that money to obtain credit cards and certificates of deposit. In reality, they can borrow only against a policy’s cash value, which is usually zero in the first year. This scheme’s goal is to get as many people to sign up as possible.

Unauthorized Insurance – the scammers sell homeowners what seems like a perfectly legitimate insurance policy. Unlike the worthless insurance scam, the insurance company actually exists and the policy has some value. However, the scammers are not properly licensed, which allows them to flaunt state and federal regulations and alter their policy terms on a whim.

Protections Against Fraud

There is a number of steps homeowners can take to avoid becoming victims of insurance fraud. They include:

Check the insurance company’s license – all state governments have some insurance regulation apparatus, often under the auspices of the state’s attorney general. All legitimate insurance companies are required to have a state-issued license. Homeowners can check to see if the company they are looking at has one by contacting the relevant state government body, which should have either a hotline or an online database homeowners can use.

Ignore unsolicited e-mails – legitimate insurance companies do not offer their products by e-mail unless the homeowners contact them first. No matter how legitimate they seem, they should be ignored.

Resist high-pressure sales tactics  – this includes last-chance offers, benefits that homeowners will only be eligible for if they buy the policy now, borderline coercive language or anything that encourage homeowners to buy a policy without taking the time to research it. Legitimate companies let their potential clients to take as much time as they need to decide.

Keep everything on record – homeowners should get rate quotes and other key information in writing and keep it on file. If an insurance company is unwilling to get anything in writing, it is definitely a scam.

Don’t disclose private information routinely – homeowners should keep their address, telephone number, Social Security number, credit card number, and medical information private unless they know who is collecting the information, why they’re collecting it and how it will be used. 

Use a secure browser – homeowners should use the latest Internet browser with all the security options turned on while shopping for home insurance online. This is particularly important during any monetary transactions. They should also have anti-virus software installed and running – it should detect any Trojan horses, keyboard readers and other software designed to record personal information and transmit it to it’s place of origin.

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