An oncoming driver waves at you to make your left turn, but as you do that oncoming driver collides with your vehicle. You get out of the car, ready to discuss what happened, but the once-friendly driver is now irate exclaiming they never made any waving motion, you just made an improper left turn, and now his car is damaged, his neck hurts, and he’s calling the police, his insurance agent, and a tow truck right away.
Bad luck or are you just a new victim of auto insurance fraud?
Auto insurance fraud is a $2 billion per year problem, and Canadian drivers pay an average of $125 extra annually on their premiums to cover those costs. To combat this, you need to know the signs of car insurance fraud and how to protect yourself against some common crimes.
Before the Accident: Buying Bad Auto Insurance
There are many ways to buy insurance. First, check that the insurance company is licensed. Every province has its own governing regulatory body you can use to find out the legitimacy of an insurance company. If you’re looking for an Ontario car insurance quote, you’ll want to use the Financial Services Commission of Ontario (FSCO). In Alberta, you’ll use the Alberta Treasury Board and Finance. The Insurance Bureau of Canada (IBC) has a full list of all the regulating provincial bodies.
Of course, you can compare several legitimate auto insurance quotes from brokers and agents online. But if you’d prefer going directly to the source a broker can give you quotes from the auto insurance companies they represent. Or you can buy your insurance directly from an agent who represents a particular insurance company.
Here’s Where Things Can Go Wrong
A fraudster could impersonate an insurance broker. They will start by offering to find you a better rate for a fee, then call an insurer and lie about detrimental details on your driving record (the reason your rates are high in the first place) to get you a better price on your insurance premium.
The problem is this price is based on fraud and after an accident, the insurer denies your claim because the phony broker provided false information. You’re left holding the bag.
As for insurance agents, criminals are advertising cheap auto insurance in community newspapers and flyers, according to the FSCO. In reality, you just gave the agent money for nothing more than a fake pink slip of coverage. If you’re pulled over for driving without insurance, that’s a serious offence, despite you thinking you had insurance.
So how can you protect yourself?
- Know that Insurance brokers are paid by the commission from your insurer.
- Don’t pay by e-transfer or money wiring services.
- Never sign a blank document.
The Accident: How Fraudsters Stage an Accident
The introductory paragraph is known as “The Left Turn” – where an innocent driver is waved forward to make a left turn. The oncoming car drives into the car it had waved through mid-turn, and the driver denies ever having signaled it was OK to merge.
According to IBC.ca, there’s also the “Swoop and Squat” – where two different criminals on the same team conspire against you. The first driver is in the lane beside you, while the other lines up in front of you. The primary driver then cuts in front of the co-conspirator who slams on their brakes. They hope that you haven’t given yourself enough space and time to avoid crashing into the car in front of you.
The “Drive Down” is when you’re waved to come out of a parking spot. A driver seems to want the space. As you pull out of the spot, they crash into you. Later they deny ever having waved at you in the first place.
After the Accident: How Fraud is Amplified
In the aftermath of a crash, it’s hard to tell if its been staged or not. Your heart is racing, your shaken up and trying to make sure you do everything by the book so you’re protected.
A tow truck company comes and picks up the damaged vehicle. If the tow is in on the scam, they charge the insurance company an excessive amount.
The damaged vehicle is taken to an auto body shop, also in on the scam, that could damage the car further to increase the size of the claim.
The fraudsters themselves have admitted themselves to a fake medical clinic where they are given a false and exaggerated diagnosis claiming they can’t go back to work and need income replacement or even care giving.
The End of Fraud
Knowing how to spot fraud is one of the best defences. If you believe yourself to be a victim, you can report it to the Canadian Anti-Fraud Centre. In truth, many Canadians may accidentally commit fraud without knowing it. Registering a vehicle to an outside family member address because of lower rates is fraudulent activity. Listing your partner as the primary driver, even when they’re not, to get a better price is also fraud. Be honest, follow the rules, and shop around for auto insurance to find your best legitimate pricing.