Car insurance fraud is rampant in Ontario. An estimated 10 to 15% of insurance premiums go towards covering the costs of fraudulent car insurance claims in the province, meaning all drivers share the burden.
This is why being vigilant and able to recognize the signs of insurance fraud can help prevent you from becoming a victim of the many games fraudsters play.
While the government, the police force, the Insurance Bureau of Canada (IBC) and your insurance providers all work in their own ways to prevent car insurance fraud in Ontario, your own diligence is your best defense against car insurance fraud.
Types of fraudulent car insurance schemes
Some fraud is intentional and obvious, while other forms are more subtle. The driver may not be aware they are engaging in fraudulent activities, but the penalties can be severe. Fraudulent insurance activity is a criminal offence and if you are found guilty of participating you can face both insurance and legal repercussions.
These are some common examples of auto insurance fraud activities.
Staged accidents – This is when an individual or a group of individuals plot together to stage an accident in order to file or inflate an insurance claim.
There are many ways you can get caught in this:
- Swoop and squat – Two vehicles intentionally cause a rear-end collision, trapping an unsuspecting driver in the middle
- Drive down or wave down – A fraudster gives you the okay to make a left hand turn or to pull out of a side street or a parking lot only to proceed and intentionally collide with your vehicle
- Enhanced damages – You're involved in a legitimate accident, but the not-at-fault driver causes additional damage to his vehicle or claims previous damage was caused as a result of the accident
Lying on your policy – This is when you omit or lie about information when you're applying for an auto insurance policy. Some refer to this as auto premium evasion. An example of this is failing to add another driver to your policy, such as a teenage driver. You may not think you're scheming, but omitting this information is fraud.
Lying about the loss – Reporting that a loss occurred in any way other than how it happened is fraud. This is common when people don't want to admit they were at-fault and so they adjust the details of what happened.
Falsifying services or treatment - This is when a healthcare provider, auto body shop or another related professional claims you were given treatments or services that you weren't in order to inflate their insurance claim. Do not conspire with them.
Recognize, Reject and Report
We may be used to the three R's standing for "recycle, reduce, reuse," but the IBC has given them a new definition when it comes to auto insurance fraud in Canada.
The idea is simple. Recognize fraudulent auto insurance activities; reject participating in fraudulent activities; report suspicious auto insurance activities to the police and to your insurance provider.
If you are in an accident, always work directly with your insurance provider and only with body shops that you trust. Be wary of recommendations or referrals made on site by others involved in the accident and be sure to report this activity to your insurance provider.
If you have any questions about how insurance fraud schemes affect your car insurance, please give us a call at 1-866-523-4111.