Is an insurance policy being sold to me over the phone at an unusually low price legit?
Treat with serious caution. Ghost insurance scams sell fake policies that provide no coverage, and extremely low prices may indicate stripped-down coverage or outright fraud.
Last reviewed: 10 June 2026
Explanation
Insurance fraud operates in two main ways. In ghost policy fraud, a caller poses as an insurance broker or company representative, collects premiums for a policy that does not exist, and the victim discovers the fraud only when they make a claim and find no record with any real insurer. In the second model, the policy technically exists but is with an unlicensed or financially unstable carrier whose claims will never be paid.
Unusually low premiums are achieved through several means: coverage exclusions so extensive that almost no real claim would be approved, deductibles set so high that they exceed the likely claim value, or simply a policy that is entirely fabricated. Real insurance pricing reflects actuarial risk, and prices that deviate substantially from established market rates warrant investigation.
Always verify that an insurance company and any broker selling on their behalf are registered with your national financial regulator. In the US, insurance is regulated at state level and state insurance commissioner offices maintain registers. In the UK, check the FCA register.
Ask for the policy document and company registration details before paying any premium, and read the exclusions carefully. If a sale was conducted by phone without a written policy document being available for review, this is a red flag.
Common red flags
- Premium is dramatically below market rate for equivalent coverage
- Cannot provide the insurance company's official registration number
- Caller is pushy and creates urgency to sign up before you can research
- Policy documents are vague, poorly written, or arrive only after payment
- Company cannot be found on any insurance regulator's database
- Claims process described as unusually simple or informal
What to do now
- Ask for the insurance company name and registration number before paying
- Verify the company on your state or national insurance regulator's database
- Request full policy documents before committing to any payment
- Compare the quote against established insurers for the same coverage
- If you already paid and have no legitimate policy, report to your financial regulator
- Contact your national consumer protection agency to file a complaint
Frequently asked questions
What is a ghost policy?
A ghost policy is a fraudulent insurance document sold for a real premium that covers nothing because the 'insurer' is not real or is not licensed. The victim has no coverage and typically discovers this only at claim time.
How do I find a legitimate insurance broker?
Use your national financial regulator's register of authorised firms. In the US, your state insurance commissioner maintains this list. In the UK, the FCA register lists authorised insurance intermediaries.