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A judge was once asked for a definition of obscenity. His reply was that he would know it when he saw it. So, to the courts, it’s acceptable to leave a concept undefined so long as anyone would know what it means. When we come to fraud, it’s a similar problem. There are so many different ways in which someone dishonest can separate a willing victim from his or her money. It can be the most simple of lies or a complicated web of deceit that lures even the most wary of people into handing over cash. For that reason, we are left with a list of components. There must be a deception of some kind. This deception must be made dishonestly, and it must cause financial loss to the person deceived. After that, it’s down to common sense. So here’s the question for you. Let’s say you ask advice from someone who seems to be an independent professional and then act on that advice by buying a product. Later you discover the professional received a substantial part of the price as a commission and that there were other, better products you could have bought at lower prices. You have suffered a loss by relying on the advice. Had you known the professional was being paid to sell that product, you would probably not have relied on the advice.

Now let’s apply that to agents and brokers who sell insurance. You ought to realize these people are being paid a commission. How else can they make the business pay? It’s basic common sense. That probably means the brokers are not dishonest by failing to explain a big slice of the first year’s premium payments will go to them. But suppose these agents know there are better products at lower prices, but none of these insurers will pay them a commission. Is it dishonest not to tell you? They know you would not buy one of their products, so it’s a lie by remaining silent. That’s why New York stockbrokers and the brokers who sell mortgages are obliged to disclose their commissions.

Welcome to Regulation 194 which has just been approved by the New York Court of Appeal. Agents and brokers have just lost the case and will now be obliged to tell residents of that state how much they will earn a commission from any sale they recommend, and whether there are any terms and conditions that will make their commission higher or lower. That now puts all agents and brokers advising and selling financial products on the same footing. This is transparency in action. Now you might reasonably ask whether similar laws are in operation in other states. After all, government is supposed to protect consumers from any criminal practices. Well, remarkably, these rules are not so common. There are no federal rules requiring disclosure. It’s expected you will protect yourselves. How are you supposed to do that? Well with the internet, you can get free health insurance quotes before you go see an agent. Armed with this information, it’s obvious who’s offering the best value. If you fail to do this before seeing an agent, you are asking to pay a high price for your health insurance plan.

It can be shocking to be notified by an insurance company that you have not been approved to receive auto insurance coverage. This can be particularly devastating if you rely on your vehicle to get back and forth to work or to get your kids to school. Driving without insurance places significant risk on you and your family if you are caught driving without insurance or are involved in an accident.

Determine the Reason

Hopefully the insurance company will include the reasons for their denial in the notice they send to you. If not, you will probably have to submit a written request to obtain the reasons. You need to know this to make sure their decision was based on facts.

Verify the Facts

It is possible they used factors in their risk calculation that are not accurate or need explanation. For example, if you have a poor credit history because of financial difficulties you experienced while married but now you are divorced with little debt in your name, this may be a reason to ask for a review of their denial. Even if they based your denial on your driving record which you know is not perfect, you should still get a copy of your record to confirm its accuracy.

Appeal the Decision

You can ask to meet with or talk to a representative from the insurance company to go over the factors they used in their calculation. You will need to provide documentation for any information you plan to refute such as that mentioned above. Errors on your application can be easily corrected and your application resubmitted for consideration.

Apply to Other Providers

If they stand by their decision to deny you coverage, you have no choice but to apply to other companies for insurance. You should be prepared to address discrepancies you may have uncovered during the appeal process to the initial auto insurance provider. Keep your paperwork handy and include detailed explanations on your application. This is especially important if you are applying online for quotes. It may be better to actually speak to a live representative if you have several clarifications that need to be made to your application. Any actions on your part to improve your risk level should be documented including refresher driving classes.

Take Legal Action

Insurance companies have the right to deny applicants coverage for legitimate reasons which are primarily based on risk to the company if they insure you. The only time you have legal recourse is if you suspect the company of denying you coverage based on discriminatory business practices. To proceed with a legal case against them, you will need evidence of this behavior.

Contact the State

If you continue to be denied based on subsequent applications to different companies, you may have to apply to your state’s Assigned Risk Pool. This is a last resort for the hard to insure. Since it is legally required to be insured, your state must offer minimum coverage through local providers to drivers who are otherwise unable to get coverage.

Before the recession, there was a constant stream of people wanting business premises, so being a commercial landlord made good economic sense. As evidence of this, look at the popularity of the Real Estate Investment Trusts (REITs). Across the US, there are a number of significant players that own office blocks, regional malls, shopping centers, healthcare centers, and residential accommodation. Despite the recession, these investment vehicles have continued to bring in steady dividends. This level of performance has not been matched by the owners of individual properties on Main Street or for private letting as residential accommodation. Large numbers of properties on Main Street are shuttered and there’s no sign of any real demand to maintain rental income. Unless demand picks up, rents will continue to fall. With mortgages now more difficult to obtain, there’s better performance in the residential market as people need rented accommodation, but care must be taken when buying property. A significant number of homes are going through the foreclosure process and, if you have the capital, can be bought relatively cheaply in auction. So long as you have professional surveys to ensure the properties are physically sound, these acquisitions represent a good long-term investment, i.e. at some point, the property market will recover and values will rise. But if you bought at the top of the boom, you may be struggling to cover the financing costs out of revenue.

Insurance is obviously a key requirement as a commercial landlord. In this, remember you are not just protecting the physical structure of the buildings you rent out. There are other risks to consider. However, the insurance industry has been quick to draw a number of red lines so, if you are still at the planning stage, here are some of the factors to consider. Particularly when the buildings are to be used for manufacturing, there’s a real risk of damage to the fabric through the activities carried out on the premises. In any other property, there will be wear and tear. People are never as careful of rented property as they are of their own. If the public are allowed into the common parts, they can also be a source of damage. Insurers believe it’s for you to accept the slow deterioration of the property through general use. A proportion of the rent you collect should be set aside for routine maintenance, repairs and redecoration. But if the risk comes from the activities of one or more of those renting, you should impose an obligation on the renters to carry their own insurance so that there will be money available to repair any structural damage.

Look very carefully at the cover against more extreme weather events and beware exclusions against settlement that causes cracks or other structural problems that may lead to rot, corrosion, molds, insect infestations or similar damage. Business insurance for the commercial landlord is all about passing on the risks to other parties. So if a contractor produces faulty workmanship and this causes damage, you need this contractor to have good insurance to pay for repairs. If the property is vacant, give notice to your insurer and check the rules on what security measures you should put in place. If you think the standard business insurance inadequate, pay for additional cover.

Everyone is used to the idea that, if you don’t own a big ticket item, you can still get one even though you don’t have the cash to buy. This may involve a loan or some other credit arrangement, or you can rent. We have moved from a society in which people used to save until they could afford to buy, to one where you can satisfy your wishes instantly with a good credit score and proof of your identity. When it comes to vehicles, it’s either been a case of talking nicely to neighbors to borrow their car in an emergency or go to a rental agency. Now we have moved beyond the carpooling arrangements into car-sharing. This is both good news and bad. At a community level, there are an increasing number of self-help groups who are making their vehicles available to each other. At the top end of the market, established renters like Hertz are making vehicles available on demand. New organizations like Zipcar also leave vehicles in designated places and anyone with a card can get in and drive them away.

The established renters are simply using the existing fleet in a more flexible way to generate money. Satisfactory insurance cover is already in place. But problems have been emerging in the less formal market. If you put your own vehicle into a pool and anyone can drive it, what happens to your own insurance cover? The answer is simple. If you do this on a regular basis and you are paid, this is a commercial use. As a private owner, this invalidates your policy.

Now states like Washington, Oregon and California are producing laws to clarify the insurance situation. In Washington, for example, we now have HB 2384 which requires all organizations offering car-sharing services to carry a minimum of $180,000 liability cover, and at least enough comprehensive and collision cover to pay fair market value should the shared vehicle be a total loss. This protects vehicle owners who can make additional money during tough times without losing their own auto insurance cover. It also imposes tough new requirements on the sharing organizations to ensure the vehicles are properly maintained and safe to drive. The public not only need auto insurance cover, they need to know the vehicles they drive away are safe.

According to the National Insurance Crime Bureau, anywhere between $200 and $300 of your annual insurance premiums is a direct result of fraudulent claims submitted by other people. It may not seem fair but a portion of fraud costs is passed on to all customers. This means a good portion of your insurance costs has nothing to do with your own driving history.

Types of Fraud

Insurance fraud comes in many forms. The insurance industry typically categorizes each case as a “hard” or “soft” fraud. A hard fraud is basically a staged situation that causes damage for the purpose of submitting an inflated claim to the insurance company. Examples include intentional fender-benders or submitting a claim as a hit-and-run when it was really a one-car accident and you were at fault.

Soft fraud usually involves a legitimate claim that is illegally altered. This is often done through padding of the claim. Examples including getting a repair shop to give you an inflated estimate on repair costs or including damage previously done to your car on a current claim involving an accident that did additional damage to your vehicle.

Impact on Auto Insurance Customers

Claim fraud is more prevalent than most people realize. Bureau reports suggest that nearly 25% of injury claims and 10% of damage claims are fraudulent. These are paid claims. So the number is actually higher when you consider those claims suspected to be fraudulent but were dismissed or dropped. The cost to the insurance industry is significant. And insurance companies freely pass those costs on to customers.

Insurance companies have to pay claims, both legitimate and otherwise. They do this through the pooled premium rates paid by all customers. As the number of claims paid increases, so too do insurance rates.

Minimize Consequences

You can do your part by submitting correctly documented claims. Understand that any deliberate misinformation provided during a claim process is technically fraud. You face real penalties including possible jail time. And you can lose your auto insurance coverage as a result of misleading your insurance company. If you are involved in an accident that you believe may be an instance of hard fraud, share your suspicions with your insurance provider.