Auto Insurance Fraud in Canada: Protect Yourself from Being a Victim

Published Sep 16, 2023 • Last updated 1 day ago • 4 minute read

Drivers across Canada are becoming more aware of the prevalence of insurance scams. In a recent poll conducted by the Financial Regulatory Services Authority of Ontario (FSRAO), 75% of insured drivers in Ontario admitted to believing that insurance scams are rampant in their province. However, only one in five respondents knew where and how to report such incidents. It’s crucial to have proper knowledge and understanding to protect oneself from insurance fraud.

Auto insurance fraud is a significant financial concern in Canada. A report by Aviva in 2018 estimated that it costs Canadians over $2 billion annually. Aside from the financial burden on the insurance system, victims of insurance fraud often experience feelings of helplessness, invasion of privacy, and a deep-seated mistrust towards society. Auto insurance fraud encompasses intentional attempts to deceive insurance companies for monetary gain, affecting both drivers and insurers.

Protecting Yourself Against Auto Insurance Scams

Verifying your insurer with regulatory bodies such as the FSRA or your local provincial regulator is one of the essential steps to avoid falling victim to auto insurance scams. Additionally, being aware of common scams and knowing what to look for can help protect you further:

Lorraine Explains: How to Avoid Staged Car Collisions

Auto Body & Tow Truck Scams

One of the most common scams involves inflated repair bills from fraudulent auto repair shops. These dishonest businesses may overstate the damage repair costs to your insurance company and increase your premium. They often collaborate with tow truck drivers to target new collisions. If you find yourself in an accident, contact your trusted insurance provider immediately to ensure you receive appropriate assistance.

Staged Collisions

Scammers frequently stage collisions to claim insurance payouts, exploiting innocent drivers. There are several types of staged collisions to be wary of:

• Rear-End Collisions: Scammers intentionally brake suddenly, causing the vehicle behind them to collide with their car.
• Wave and Hit: Scammers wave a target driver through an intersection or parking lot entrance, only to quickly move their vehicle into their path, causing a collision.
• Planted Witnesses: Staged collisions often involve planted witnesses who defend the scammers, making the innocent driver appear at fault.

While it may be challenging to protect yourself against these scams, defensive driving and maintaining composure under pressure are crucial for a safe and incident-free journey. Urgently report any collisions to 911 and document the scene with photographs. Gather witnesses’ contact information and trust your instincts — if something feels off, report it to the authorities.

Fake Pink Slips

Another scam to beware of involves fake auto insurance liability forms, which scammers sell online through classified websites. To avoid falling victim to these scams:

• Only purchase insurance coverage directly from legitimate companies.
• Avoid using third-party websites for purchasing auto insurance.
• Never use cash or e-transfer for insurance payments.
• Remember, if a deal seems too good to be true, it probably is.

Handling Auto Insurance Scams

If you suspect or become a victim of an auto insurance scam, take immediate action:

• Report the incident to the relevant authorities, including the Insurance Bureau of Canada (IBC).
• Contact your provincial insurance authority and your insurance company.
• Preserve any evidence you have and document all the details while they are fresh in your memory.
• Reach out to witnesses and consider searching social media for additional evidence, such as dashcam footage.

Remember, knowledge is power when it comes to protecting yourself from car insurance scams. Stay informed, be cautious, and only work with reputable insurance companies. Use trusted rate comparison websites like LowestRates.ca to find the best rates from licensed insurers that suit your coverage needs.

Source: LowestRates.ca

Reference

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