Unauthorized Insurer

AAA

DEFINITION of 'Unauthorized Insurer'

A company that poses as an authorized provider of a financial protection plan. Unauthorized insurers are fraudulent operations that take advantage of consumers and sometimes even insurance agents to collect "premiums" on nonexistent policies. Victims lose their premium money and find themselves exposed to large potential losses that would have been protected by a legitimate insurance policy.

INVESTOPEDIA EXPLAINS 'Unauthorized Insurer'

Sometimes even legitimate insurance agents can be duped by unauthorized insurers. When this happens, it puts the agent in a very bad situation. Even if the agent has unknowingly acted as a representative of the unauthorized insurer, he or she can be personally responsible for clients' outstanding claims, can be charged with committing a crime, can have his or her insurance license revoked and can be forced to pay a professional fine. Insurance agents can avoid such outcomes by checking with their state's department of insurance to find out if an insurer is licensed to sell the insurance product they are offering. Agents should take this step before selling their clients any policies from a particular insurer.

RELATED TERMS
  1. Unauthorized Insurance

    A phony plan that claims to provide financial protection against ...
  2. Unauthorized Investment

    Any investment that has not been specifically authorized by a ...
  3. Fake Claims

    The term fake claims refers to insurance claims that are made ...
  4. Insurance Claim

    A formal request to an insurance company asking for a payment ...
  5. Fiduciary

    1. A person legally appointed and authorized to hold assets in ...
  6. Insurance

    A contract (policy) in which an individual or entity receives ...
RELATED FAQS
  1. If both the primary and contingent beneficiaries are unavailable, what happens to ...

    One of the most common mistakes in estate planning is not keeping beneficiary designations up to date on life insurance policies ... Read Full Answer >>
  2. Who sets the global standard to stop money laundering and how is it implemented?

    The Financial Action Task Force (FATF) sets the international standard for fighting money laundering. Formed in 1989 by leaders ... Read Full Answer >>
  3. Why does fighting money laundering reduce overall crime?

    Money laundering is the process of converting funds received from illegal activities into ostensibly clean money that does ... Read Full Answer >>
  4. What types of insurance policies have contingent beneficiaries?

    A contingent beneficiary is a person designated to receive the benefits of an insurance policy or retirement account if the ... Read Full Answer >>
  5. Do contractors require subrogation clauses for their contract workers?

    Contractors often require subrogation clauses for their contract workers. To prevent a building owner's insurance company ... Read Full Answer >>
  6. Can you ask your landlord to remove a waiver of subrogation clause from your lease?

    You can ask your landlord to remove a waiver of subrogation clause, but you will both need to agree to its removal or the ... Read Full Answer >>
Related Articles
  1. Insurance

    Insurance Tips For Homeowners

    Use these simple ideas to save money and get better coverage for your house.
  2. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  3. Home & Auto

    The History Of Insurance

    The first written policy appeared in Hammurabi's Code. Find out how it evolved from there.
  4. Home & Auto

    How An Insurance Company Determines Your Premiums

    Find out how insurers use credit history to build an insurance score and how it could affect your bottom line.
  5. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  6. Home & Auto

    5 Insurance Policies Everyone Should Have

    Insurance policies come in a wide variety of shapes and sizes. Shop carefully and the right policies will go a long way towards helping you protect your assets.
  7. Insurance

    How Much Life Insurance Should You Carry?

    Learn how much - if any - insurance you really need.
  8. Insurance

    Life Insurance: Putting A Price On Peace Of Mind

    Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected.
  9. Economics

    What is Adverse Selection?

    Adverse selection occurs when one party in a transaction has more information than the other, especially in insurance and finance-related activities.
  10. Investing

    What's an Agency Problem?

    An agency problem occurs when a conflict of interest arises for an agent -- a person acting on behalf of another person. The conflict of interest arises when the agent’s own interests are different ...

You May Also Like

Hot Definitions
  1. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  2. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  3. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  4. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  5. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  6. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
Trading Center