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Many may be victims of auto insurance scam, state says

State regulators said today that hundreds of Detroit-area drivers may have unknowingly bought sham auto insurance issued on behalf of a Texas-based insurance company.

“We have reason to believe there may be as many as 1,000, if not more” people who bought the bogus insurance certificates, said Michigan Office of Financial and Insurance Regulation spokesman Jason Moon.

The state late last week issued an order for Don Diamond and Ethos Insurance – Michigan, Ethos Insurance Group and Ethos Mutual Insurance Group to stop fraudulent insurance deals. Regulators said bogus policies that purported to provide coverage through legitimate insurers including Farm Bureau Insurance and Dairyland Insurance were issued under the names of Diamond or Ethos.

Reached today in Texas, Diamond blamed subcontractors in Detroit who wrote fake policies and took money from consumers. He said Ethos notified the state when it learned of the problems.

Diamond said he suspects the number of victims is closer to 200 and pledged to provide refunds to anyone with a legitimate receipt.

“We don’t want any consumers to have any problems,” Diamond said. “We’ve been in business since 2000 and have never had a problem like this.”

Drivers who believe they may have been scammed are urged to contact the OFIR at 877-999-6442. Drivers who purchased those policies are “driving without insurance,” OFIR Commissioner Kevin Clinton said.

The OFIR’s investigation found the bogus low-cost car insurance policies at locations around the city. Moon said concerned Detroiters notified state regulators after Ethos did not provide proper insurance documents.

The OFIR said the investigation is ongoing but results have been forwarded to Michigan Attorney General Bill Schuette’s office for review.

Detroit Free Press

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Written by lordsinsurancelog

May 23, 2011 at 10:03 pm

Posted in Insurance News