They cheat – You pay: How to report auto insurance fraud

March is Fraud Prevention Month, and Insurance Bureau of Canada (IBC) is asking you to help curb auto insurance fraud.

Auto insurance fraud costs Ontario drivers an estimated $1.6 billion each year. This means that $236 of a driver’s auto insurance premium pays for the illegal activities of fraudsters. The bottom line is: They cheat, you pay.

“Ontarians pay among the highest insurance premiums in the country,” said Kim Donaldson, Vice-President, Ontario, IBC. “Addressing the heavy impact of fraud is critical if drivers are going to have substantial and sustained relief in their auto insurance costs.”

“Auto insurance fraud is an organized big business, largely unknown to consumers, that siphons resources away from our health care system, ties up our emergency services and courts, and drives up insurance costs,” said Dan Service, National Director, Investigative Services, IBC.

Protect yourself against fraud by following these tips.

Avoid staged collisions: A staged collision is no accident – it supports false auto insurance claims. A collision scenario can be mimicked regardless of the number of vehicles or occupants reported, the events reported, or the resulting damages and injuries.

  • Never tailgate; instead, allow adequate distance between your vehicle and the vehicle ahead of you. Look well beyond the front of your car while driving.
  • If you suspect that you have been a victim of a staged collision, call the police from the accident scene and call IBC’s confidential TIPS Line at 1-877-IBC-TIPS. The line is open 24 hours a day, seven days a week. Or, submit an anonymous tip to IBC online.
  • Notify your insurance representative immediately.

If you are involved in a collision, take extra care:

  • Write down the other vehicle’s licence plate number, collect the driver’s licence and insurance information, photograph the damage, note the other driver’s behaviour and watch for warning signs of a scam. If you have been involved in an auto accident that just didn’t feel right, it might not have been an accident at all. Criminals are devising increasingly elaborate staged accidents – complete with fake injuries – to collect on insurance policies. Call IBC’s TIPs Line if the accident circumstances seem suspicious.
  • Use a reputable tow truck service. Be sure the tow truck has a licensing number and carefully read anything you are asked to sign. Have your vehicle towed to a secure location of your choosing.
  • Call your insurance representative as soon as possible.

Do your homework when purchasing a used vehicle:

  • Select a reputable dealer and look into the vehicle’s history. If the deal seems too good to be true, it probably is.
  • Inspect the vehicle you’re considering buying to make sure it wasn’t in a flood. Check for water stains and mildew. Look for sand or silt under the carpets, floor mats and headliner cloth, and behind the dashboard. Look for rust on the screws on the console and in other areas where water doesn’t normally reach.
  • Check IBC’s VIN Verify Service. This free IBC service allows consumers to check a database to determine if a vehicle has been reported as being seriously damaged in a flood or fire.
  • Have a certified mechanic inspect the vehicle before you buy it.

IBC and property and casualty insurers across Canada work with law enforcement agencies, all levels of government, insurance broker organizations and other stakeholders to raise awareness and coordinate efforts to fight this crime. The Provincial Auto Theft Network (PATNET), for example, is an award-winning IBC program that brings together law enforcement agencies and the insurance industry to reduce auto theft and insurance fraud.

“Insurers and their partners are already playing a significant role in reducing instances of auto insurance fraud. It is important that consumers know what to look for to avoid becoming victims,” added Service.

Recognizing the seriousness of the problem, the Ontario government has made a commitment to establish a Serious Fraud Office (SFO), which has the potential to reduce auto insurance costs for Ontario’s almost 10 million drivers. “The insurance industry is grateful for Ontario’s commitment to an SFO, especially as fraudsters develop increasingly sophisticated schemes that are harder to detect,” added Donaldson. “Often, fraudsters collaborate with businesses that seem entirely legitimate.”


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