What Do You Know About Car Insurance Scams?
Car insurance scams try to game the system with staged accidents, fake claims, and fake or exaggerated injuries. Car insurance fraud costs Canadians over $2 billion a year and contribute to higher car insurance rates.
What do you know about car insurance scams?
Here’s what you need to know about car insurance scams:
Staged accidents: Individuals purposely cause a car accident to make fraudulent claims for vehicle damage or injuries.
Exaggerated or fake claims: Policyholders may exaggerate the extent of damages or injuries to receive higher payouts.
False documentation: Providing false or altered documentation, such as medical records or receipts, to support a fraudulent car insurance claim.
Phantom policies: Selling fake insurance policies to unsuspecting individuals, leaving them without valid coverage.
Identity theft: Using stolen personal information to file false car insurance claims.
Insurance agent fraud: Agents may sell unnecessary or fake policies, pocketing the premiums.
Medical provider fraud: Healthcare providers may bill for services not rendered or inflate bills for services rendered after a fake car accident.
Here are some of the most common staged accident scams:
Rear-end collision scams
This is a common accident that is staged. The fraudster will pull in front of you, wait for you to get close, and then jam on the brakes, causing you to rear-end them. This works because, in most traffic accidents, the person who rear-ends the other vehicle is almost always at fault.
T-bone accident scam
A scammer will wait for your car to enter an intersection. They then speed into the intersection and T-bone your vehicle. A fake witness will tell the police that you were the one who ran the red light or stop sign, causing you to be at fault.
Sideswiped car accident
In this car insurance scam, another driver purposely turns into your vehicle to cause an accident. It commonly happens when you may be distracted or during a lane change.
Wave and hit
In this scam, you will be waved through by another driver, who has the right of way. When you begin to proceed, the scammer will speed up to cause an accident. They deny waving you through and make it seem like your fault.
Start and stop
This can happen during rush hour and in locations with heavy stop-and-go traffic. The scammer, in the vehicle ahead of you, starts to drive forward as traffic speeds up, but then brakes suddenly, causing a rear end traffic accident.
Do you know about the bad Samaritan scam?
In this scam, a second scammer, who was not involved in the accident, will approach you and make seemingly helpful suggestions. They may suggest you use a specific tow truck, body shop, or legal service, which would all be fraudulent. They may pose as authority figures such as a doctor, fire fighter, or an off duty police officer.
What are the consequences of insurance fraud?
When insurance fraud occurs, it can have serious consequences for both the individuals involved and the insurance company. Car insurance scams have been a widespread problem across Ontario.
Legal consequences: Those involved in insurance fraud can face criminal charges, fines, and even imprisonment.
- Insurance fraud under $5,000 carries a maximum sentence of 2 years of imprisonment.
- Insurance fraud over $5,000 carries a maximum of 14 years of imprisonment.
- Insurance fraud over $1 million carries a minimum sentence of 2 years of imprisonment.
Loss of coverage: Insurance companies may deny claims, cancel policies, or refuse to renew policies for individuals found to have committed fraud.
Financial impact: Insurance fraud can lead to higher premiums for everyone, as insurance companies may increase rates to offset losses from fraudulent claims.
How to avoid insurance fraud after a collision
If you were in an accident, call 911, take photos of the scene and damage to the vehicle. Collect the other driver’s information (plate numbers, insurance info, driver’s licence, how many people were in the car).
Be informed: Understand your insurance policy and coverage so you can recognize potential fraud.
Be cautious: Be wary of unsolicited offers or deals that seem too good to be true.
Verify information: Confirm the legitimacy of any claims or offers before providing personal or financial information.
Report suspected fraud: If you suspect insurance fraud, report it to your insurance company or the appropriate authorities.
Work with reputable professionals: When seeking insurance or repairs, work with reputable insurance companies, agents, and contractors.
Stay alert: Watch for red flags such as pressure to make a quick decision or requests for payment upfront.
Being vigilant and informed can help protect you from falling victim to insurance fraud. Report any suspicious activity to your insurance company. File a report with local police and/or a provincial or territorial Crime Stoppers organization.
You can also submit an anonymous tip online at the Insurance Bureau of Canada, or call their toll free tip line at 1-877-422-TIPS (8477)
