Ghost brokers may apply for a genuine policy in your name, keep your premium payments, then cancel the policy shortly after — all without your knowledge. This practice allows the fraudsters to deceive unsuspecting "customers" into thinking they have a legitimate policy. The victim may only find out that the policy was canceled after making an insurance claim.

Ghost brokers typically advertise cheap insurance on social media sites or messaging apps. In fact, insurance fraudsters typically tout policies that are much cheaper than competitors' policies, according to the National Association of Insurance Commissioners (NAIC). A tip from the City of London Police: If a so-called agent's insurance rate seems too good to be true, it probably is.

These watchouts may help you spot a fraudulent insurance agent. Be wary of:

Agents who advertise cheap insurance on social media sites or messaging apps.
Agents who communicate solely via social media or email. The NAIC says fraudsters may not list a phone number or may be difficult to reach via phone.
Agents who ask for cash-only payments in person, through social media or via cash-transfer mobile apps, according to PropertyCasualty360.
Agents who promise to secure an insurance policy for you without providing any direct communication or documents from the insurance carrier.