• Fri. Dec 1st, 2023

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Don’t fall for these common car insurance scams

Auto insurance fraud costs Canadians $2 billion a year, here’s how to protect yourself from being another victim

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Drivers throughout Canada are increasingly aware of the threat of insurance scammers. In Ontario, for example, a poll conducted by the Financial Regulatory Services Authority of Ontario (FSRAO) earlier this year found that 75 per cent of insured drivers feel insurance scams are widespread in their province — but only one in five surveyed knew how to and where to report an incident.

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Regardless, their fears may be well-founded. Another report from Aviva from 2018 found that auto insurance fraud is costing Canadians over $2 billion per year. But beyond the financial burden on the system, the victims themselves are often left feeling helpless, invaded, and left with a deep-seated mistrust of society.

A car insurance scam is simply any intentional attempt to con auto insurance companies into paying out, costing drivers and insurers alike. Most road users can be potential targets for auto insurance scammers, particularly women and elderly drivers. Those driving new cars, expensive models and commercial vehicles are also common targets.

How to protect yourself against insurance scammers

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One of the first and most essential steps you can take to avoid car insurance scammers is to verify your insurer with the FSRA or your local provincial regulator. After that, the best protection against car insurance scams is knowing what to look for.

Auto body & tow-truck scammers

One of the most common auto insurance scams to beware of is an inflated bill from the auto body repair shop. Fraudulent auto repair businesses may report false damage repair costs to your insurance company, seeking a greater payout while also hiking up your premium.

These companies will often hire tow truck drivers to target new collisions, so be sure to contact your trusted insurance provider as soon as possible after an accident. As noted by the Insurance Bureau of Canada (IBC), it’s your right to decide who tows your vehicle, and which auto repair location they bring it to.

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If you’re feeling pressured by a tow truck driver at the scene of your collision, politely refuse and wait it out until your insurer’s tow-truck arrives.

Staged collisions

Shady collisions are a frequent route for scammers looking to claim insurance payouts. There are several types of staged collisions to watch out for.

  • Rear end collisions: When a scammer intentionally slams on their breaks, causing the car behind to hit them.
  • Wave and hit: A scammer waves a target driver on through an intersection or parking lot entrance, then quickly moves their vehicle into their path to cause a collision.
  • Planted witnesses: Any targeted or staged collision could make use of a planted witness who will go on record in defense of the scammers.

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No matter the type, staged collisions work by attempting to make the innocent driver look as though they’re at fault. It may feel hard to protect yourself against such fraud — but good defensive driving, and maintaining a cool head under pressure, are both key to passing through safely and unscathed.

Aftermath of a crash
Aftermath of a crash Photo by Getty

Make sure you always call 9-1-1 to report any collisions you’re involved in, and take good pictures of the scene, if possible. It’s also important to speak to a witness or two and ask for their contact details.

Plus, remember to trust your gut: if you get the sense that something is off, reporting suspicious activity to the authorities as soon as possible could help you out later on.

Fake pink slips

Another scam to look out for are fake auto insurance liability forms sold online. Scammers will take to classified websites such as Craigslist to sell forged and counterfeit insurance papers to unsuspecting drivers.

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The easy way to avoid these scams is to only purchase insurance coverage directly through legitimate companies. Avoid using third-party websites, and don’t ever use cash or e-transfer to purchase auto insurance. A good rule of thumb is that if a deal seems too good to be true, it probably is.

How to handle auto insurance scams

If you find yourself the victim of any auto insurance scam your first step is to report the incident. Even suspected attempts at fraud should be reported to the relevant authorities.

You can report insurance fraud to IBC online or via the phone. Make sure to also contact your provincial insurance authority, as well as your insurance company.

From there it’s important to gather all the evidence you can and take note of all the details while they’re fresh in your memory. Reach out to any witnesses if you have them, or consider searching social media for evidence. Sometimes other road users will share dashcam footage of road incidents online, so it’s worth looking online if you’re in need of help.

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Information is protection

While car insurance scams are costing Canadian drivers more in premiums each year, the biggest step you can take to protect yourself is being informed. Knowing how to spot a scam in action can make us feel less vulnerable when we’re out on the road.

And remember to make sure you’re only working with legitimate insurance companies. Using a credible price comparison site like LowestRates.ca can help you find the best rates among trusted licensed insurers, no matter your coverage needs.

LowestRates.ca is a free and independent rate comparison website that allows Canadians to compare rates for various financial products, like auto and home insurance, mortgages, and credit cards.

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