Last reviewed: 3 October 2026
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Unlicensed insurance sellers and fake policies: warning signs the Texas Department of Insurance lists
The short answer: the Texas Department of Insurance (TDI) says it is illegal to sell insurance in Texas without a license, and that unlicensed companies rarely meet the state's minimum financial requirements.[1] Its main prevention tip is to check that your agent or company is licensed or registered. This page reports what TDI's guide says for Texas. Other states have their own rules and lookup tools.
The short version
- TDI says to make sure your agent or company is licensed or registered to sell insurance in Texas.[1]
- TDI says to learn an agent or company's license status by calling its Help Line at 800-252-3439 or by checking its website.[1]
- Know the company's exact name: TDI says unlicensed companies often use names similar to licensed companies.[1]
Why TDI says unlicensed insurance matters
TDI says the only exception to the license rule is surplus lines carriers, which are out-of-state companies that insure unusual or hard-to-place risks. They must still register with TDI to do business in Texas and be licensed in their home state or country.[1]
TDI says an unlicensed company will collect your premiums and might even pay a few small claims so you keep paying. Then, when you have an expensive claim, the company could disappear and leave you with no coverage and expensive bills.[1] It says consumers and small businesses who have trouble finding or affording insurance can be vulnerable to these schemes.[1]
Warning signs TDI lists
| Warning sign | What TDI says |
|---|---|
| A name that is close to a licensed company's | Unlicensed companies often use similar names. If you find even a small difference between the name a company gives and the name TDI has on record, TDI asks you to tell it immediately.[1] |
| A price far below others | "Beware of low premiums." TDI says to be cautious of any plan or policy that costs a lot less than others you have priced.[1] |
| Pressure to decide quickly | Take as much time as you need, and do not let an agent or company representative pressure you into making a decision. TDI says not to buy from anyone who tries to talk you into a quick decision.[1] |
| Contact you did not ask for | Be cautious of unsolicited emails, phone calls, letters, or anyone who comes to your house uninvited, and do not give your Social Security number or personal information to anyone you did not contact.[1] |
| A claim to be from the government | TDI says the government does not sell insurance, and that agents who say they are with the government are breaking the law.[1] |
| Pressure to swap an annuity or life policy | TDI says to be wary of agents who urge you to cash in an existing annuity or life insurance policy to buy a new one, and says changing within the first three to five years can cause you to lose money.[1] |
Warning signs aimed at businesses
- TDI says unlicensed companies often try to sell fraudulent policies to businesses, and might claim to be associated with a trade union, trust, or multiple employer welfare arrangement (MEWA), which must be licensed in Texas like insurers.[1]
- TDI says an unlicensed company might claim a plan is exempt from state regulation because it is self-funded or an ERISA plan, and that your business will seldom be sold a valid ERISA plan from an outside company or agent.[1]
- For health plans, TDI says to ask for references of other enrolled employers and ask them about the plan's benefit payment history and claim turn-around time.[1]
Health insurance marketplace helpers
TDI says it licenses insurance agents, brokers and companies, and that the federal government oversees navigators and counselors in the federal marketplace. To verify that a navigator or counselor is certified, call the federal marketplace at 800-318-2596 or visit HealthCare.gov.[1]
Reporting
TDI says to report suspected insurance fraud to its Fraud Unit online or through its Help Line at 800-252-3439. It also says Texas law requires you to report known or suspected insurance fraud within 30 days, and protects you from retribution or liability for reporting in good faith.[1] Our guide on the fraud reporting duty covers the related rule for licensed producers.
How to verify this yourself
Check the license of the person and the company before you pay. In Texas, use the TDI Help Line or website lookup TDI describes, and see our guide to checking an agent's license in Texas. In other states, use that state's insurance regulator; our license-check guide and state regulator directory show where to start.
What this page does not cover
This page draws on one Texas guide. TDI's guide also covers health care provider fraud, auto accident fraud and mortgage fraud, which we do not cover here. We did not read other states' guidance, so rules and warning signs may differ elsewhere. A license check shows license status; it does not show whether a product is right for you. We name no company. This is general information, not legal or insurance advice. If you think you have been sold a fake policy, contact your state insurance regulator.
Your next step
Before you pay for any policy, get the seller's exact name and license number, check both with your state regulator, and take your time deciding. If the checks do not match, stop and call the regulator.
Related checks
Our standard explains how we check an agent's license and disciplinary history. Check an agent reports our findings at category level, as a method and not a verdict. Neither reviews any insurer, plan or product. To confirm the person selling you coverage is licensed, see how to check an agent's license. More plain-language guides are in the agent guides.
When we will update this page
We re-read the sources when they change. If something here is out of date, tell us. Corrections are dated on the page.
References
- [1] Texas Department of Insurance, "Insurance fraud guide" (consumer bulletin), read 3 October 2026 — tdi.texas.gov/pubs/consumer/cb044.html
What you can do next
- Check an agent's license yourself, step by step
- Check an agent (United States agents and brokers only) — see which ones we have checked
- See how we check — the rules and sources behind each result
- Report an error or request a correction
- Browse all agent guides