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Insurance Identity Theft

The "New" Type of Identity Theft


Insurance Identity Theft

Although few insurance companies offer any real protection from identity theft, insurance and insurability can be dramatically impacted by insurance identity theft.

Getty/Christine Balderas

Insurance identity theft is closely related to financial identity theft and medical identity theft. It can impact your finances and healthcare treatment, but by its nature, insurance identity theft provides a very special type of hell for its victims.

With the rise of illegal immigration, social security identity theft has become the 800 pound gorilla in the room that nobody is talking about. This is closely tied to the fact that illegal immigration is such a political hotbed that no politician wants to be associated with, despite the fact that the phenomenon has been directly linked to the downward financial spiral Americans now face. (Fortunately, your Guide is not running for any political offices, so it’s fairly safe to be honest and confront the issue head-on.)

Illegal immigrants simply want to live as Americans, which requires three key things: a social security card, a driver’s license, and insurance. Providing these documents can be highly lucrative – a Nevada DMV employee was recently charged with selling legitimate driver’s licenses to illegal aliens, and brought in at least a $250,000. If convicted, she may serve as little as 3 years, after which she will be able to go buy a new house with cash, and probably a new car, to boot.

Social security numbers that are actually issued by the Social Security Administration also bring in top dollar for identity thieves. One identity theft ring in Arizona was closed in 2005, after investigators found the ring was marketing between 1,000 and 1,500 identities per month at $1,000 each. This particular ring provided a driver’s license, social security number and medical insurance card.

So, why would an identity thief be concerned about insurance? Simply put, medical care is one of the hottest commodities the United States currently has, which has a lot to do with why the Federal government wants control of the industry. When you go looking at job boards in many states, a full third of the jobs available require some sort of medical training. Getting healthcare is high on most people’s priority lists, and this is true regardless of legal status. For many, using someone else’s insurance information to get medical services is the only option available. (And just to be clear, it is not exclusively illegal immigrants who do this, although that demographic is the bulk of the problem.)

A victim of insurance identity theft will first face fraudulent claims against their legitimate policy. Sadly, this can be overlooked until the policy has reached its “cap” – the maximum amount the policy will pay out. Then the policy is cancelled. The cancellation notice is often the first the insured hears of the problem, and then (of course) it’s too late to do anything besides argue with the insurance company. It can be “iffy” when it comes to getting the problem resolved, too. And while you’re debating with the insurance company about whether or not it is possible for you to be going to hospitals or driving in several states at the same time, you will most likely find that other insurance companies will refuse to give you coverage.

That is the specific reason insurance identity theft has earned its own category. Not being able to get insurance isn’t really a financial problem, and it isn’t really medical identity theft either, because it gives the victim a whole new set of problems that may be unrelated to either of those issues, while still giving him or her plenty of headaches and worries. And you don’t even want to start thinking about all the hours you’ll spend filling out forms and talking to representatives on the phone, explaining the same thing over and over again.

Unfortunately, this type of identity theft will usually present legal issues that need to be addressed as well. For example, it may spill over into the financial identity theft arena because you refuse to pay deductibles that may be associated with your policy. You may actually have to engage a law firm or attorney to help you navigate the intricacies of an insurance policy – or worse still, take an insurance company to court to get them to clean your record up so you can get insurance again.

But even if you manage to get that done, it would not be surprising to see that you will have to change insurance carriers, because that specific company may not want to take on the risk.

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