Feb 24, 2021
What You Need To Know About Insurance Fraud And Scams
Insurance fraud and scams are a widespread problem across Ontario. All drivers must be conscious of the types that can be staged. Otherwise, you could become a victim.
Fraudulent activity is one of the leading causes of higher rates. Fraud not only impacts the victims and insurers, but also impacts all drivers by increasing costs. It's estimated to cost the insurance industry about $1.3 billion a year in Ontario.
What Is Insurance Fraud?
Insurance fraud is the intentional or unintentional act of deceiving an insurance company for financial gain. Committing this crime includes :
- Knowingly lying on an application
- Stating previous damage to a vehicle, along with damage
- Non-existent injuries
- Submitting healthcare claims after a person after recovery
- Making an injury or damage claim from an accident that never opened
- Automobile repair fraud
What Is The Punishment For Insurance Fraud?
The are many consequences for being involved in insurance fraud :
- Denial of claim : What you submit related to the false incident will be denied.
- Cancellation : Your policy can be cancelled.
- Trouble getting coverage : You could be denied car insurance in Canada.
- Jail time, criminal charges: You could also face jail time or fines.
Penalties For Committing Insurance Fraud
Insurance fraud is a crime. You could face criminal charges and jail time if convicted. The charges include :
- Over $5,000 : Up to 14 years in jail
- Under $5,000 : Up to 2 years in jail
According to the Criminal Code of Canada :
380 (1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretense within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service,
- (a) is guilty of an indictable offence and liable to a term of imprisonment not exceeding fourteen years, where the subject-matter of the offence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars; or
- (b) is guilty
- (i) of an indictable offence and is liable to imprisonment for a term not exceeding two years, or
- (ii) of an offence punishable on summary conviction,
- where the value of the subject-matter of the offence does not exceed five thousand dollars.
Most Common Insurance Scams
Insurance scams are one of the main reasons drivers pay some of the highest premiums for Ontario auto insurance. Here are some of the most common automobile-related scams :
The Bad Samaritan
In this scam, a second scammer, who was not involved in the accident, will approach you after an accident and attempt to make "helpful" suggestions. They may suggest using a specific tow truck, body shop, or legal services, which are false. They may pose as authority figures such as a doctor, firefighter, off-duty police officer, or someone else you would trust.
Fake injury scams are common after minor fender benders. The other driver often alleges they have back pain or other difficult-to-diagnose injuries. They seek medical attention and file a claim. The scammer may use a doctor or clinic that is working with them.
Believe it or not, some scammers will state they were in the vehicle and sustained injuries when they were not even involved in the accident. They will file a personal injury claim with your insurance company and seek compensation.
A tow truck driver arrives at the scene of an accident and recommends towing your vehicle to a specific repair shop. The repair shop pays the tow truck driver a fee for bringing your vehicle to their shop. The repair shop will then overcharge for repairs and make up required repairs, costing you and your insurer more money.
Scammers will say their vehicle was damaged worse than it is. They do this to pocket the payout. Some scammers even use pre-damaged vehicles to cause the accident.
Tips For Handling Insurance Scams
How you handle yourself at the scene of a potential accident scam is essential. Your actions will not only protect you from being deemed the cause of an at-fault accident, but it will also help to catch scammers in the act potentially. Here are some tips for handling a suspected car accident scam situation :
- Record as much information as possible : Like any other type of automobile accident, follow recommended car accident reporting protocols. Take photos, write down their car insurance in Ontario information, vehicle registration, driver's license number, contact details, a description of the driver and a record of the events.
- Call the police : If you suspect a scam, call the police immediately, even if it was a minor accident or fender bender.
- Make a note of your surroundings : Did anyone appear on the scene right away? Was anyone acting suspiciously? Was anyone attempting to pressure or intimidate you?
- Do not accept a settlement on-site : Some may attempt to settle the situation on-site with cash. Please do not take it.
- Notify your insurer : Whether you decide to file a claim or not, report the accident to your insurer. Let them know if you think you may have been the victim of a scam.
Be Aware Of Staged Auto Scams
Here are some common staged scams :
- Unnecessary sudden movements : If a vehicle stops suddenly, cuts you off or makes an unnatural move, it may be a sign of an accident scam.
- Pressure : The other driver or "witnesses" pressure you to use a specific tow truck company, body shop, or medical clinic.
- Gut feeling : Something seems off about the situation.
- Convenient witnesses : Witnesses appear on the scene almost immediately and back up everything the other driver says.
- New passengers : Extra passengers seem to appear and jump into other cars involved.
How To Avoid Insurance Scams
Your first step to avoiding being a victim of a car accident scam is awareness of the above-staged car accident scam indicators.
Here is what to look out for :
- Be suspicious of strangers making referrals : Contact your insurer if you suspect anything suspicious, like strangers referring you to medical professionals, body shops or legal representatives.
- Use professionals you trust : Go to medical or legal professionals you know or are referred to you by someone you trust.
- Keep track of your records : Be involved in your claim and keep track of all the records, bills and statements to ensure that they are accurate and only include the services or treatments you received. Understand what your final settlement includes and all the associated costs.
- Pay attention to what you sign : Don't sign any blank or empty forms or documents.
- Fraud rings : These groups know whom to target, how to circumvent rules, laws, regulations, and how to profit from it. Fraud rings involve a group of people who work together to commit popular scams and fraudulent activity. These scams can be complicated and involve dozens of people, such as lawyers, truck drivers, and mechanics.
How To Prevent Committing Insurance Fraud
Auto-related fraud prevention starts with you. It's not only about avoiding scams but also about being honest and truthful when filing claims.
Here are some tips to avoid committing an offence :
- Understand fraud : Make sure you are clear on what is considered.
- Be honest : Never knowingly provide false information to your insurer or when filing paperwork.
- Ask questions : If you are not sure, you are better off getting professional advice from an advisor.
- Keep detailed records : If you are involved in an accident, take accurate notes and photos.
Insurance Fraud FAQs
It is a specific intent crime. A person involved knowingly committed the action to do a fraudulent activity such as a fake accident or lying to their insurer.
You can be charged as a felony depending on the type and amount you fraudulently tried to claim.
The punishment for this crime will range from fines, community service, and even jail time.
Protect Yourself From Automobile Insurance Fraud And Scams
Always pay attention to what is happening on the road and around you. Trust your gut – if something seems off, you might be experiencing a scam. Keep If you suspect fraud, you can make an anonymous call 24/7 to 1-877-IBC-TIPS (422-8477) or use the IBC website.