In a previous blog post titled 'Auto Insurance Rates are Going Up' we wrote that drivers in Ontario could be paying as much as 11% more for the same coverage at their renewal.

We also discussed some of the factors that determine your car insurance rate and explained that your age, location, and driving record, among other factors, all go into the rate you get year after year.

But one thing we didn't talk about was the impact that insurance fraud has on claims. Since March is Fraud Prevention Month, we thought we'd briefly talk about what constitutes insurance fraud and how to avoid it.

What is Insurance Fraud?

Insurance fraud is a false of exaggerated insurance claim. According to the Insurance Bureau of Canada, insurance fraud accounts for over $1 billion dollars a year in added insurance premiums and unfortunately, it's the honest policyholders that ultimately pay for it.

Examples of Insurance Fraud

So let's go through a few examples of insurance fraud.

1) 'Fake News' - in a world dominated by hoaxes and fake news, it's no wonder that fake information can lead to insurance fraud. Failing to disclose accurate information when applying for insurance does not accurately reflect your insurance situation. Giving the wrong type of vehicle you are driving, not disclosing the two times you've been cancelled for non-payment or the three claims you've made in the last five years also does not accurately reflect your insurance situation.

2) Staged collisions - a staged collision is when a driver intentionally causes an accident with another unsuspecting driver and makes it look like the innocent driver is at fault. For example, one of our friends was involved in a potential staged collision when another driver purposely slammed on the brakes right in front of them. Our friend was unable to stop in time and hit the other car on the back bumper. Fortunately there were a number of witnesses and even a dash cam that saw what actually happened and our friend was not charged.

3) Dishonest tow trucks and auto repair shops - have you ever taken your car to an auto repair shop for a 'minor scratch' only to be told that that 'minor scratch' was actually a major problem and required major work? This example is a bit of an exaggeration but dishonest auto repair shops and tow trucks can inflate their work and intentionally overbill insurance companies for the work they do.

How to Avoid Insurance Fraud

1) Only take your vehicle to an automotive repair shop you trust, or one that is recommended to you by people you trust.

2) The IBC suggested you be involved in your claim. Compare your records against the statements you receive from your insurance company to make sure the bills are accurate and don't include goods or services you didn't receive.

3) Never sign a blank insurance claim form.

How to Make an Insurance Claim

Before reporting your claim, here are a few quick tips:

Review your Insurance Policy - since every insurance policy is unique, reviewing your insurance policy is an important step to ensure you are covered, or if there are exclusions in your policy.

Consider your Options - should you make a claim? What is your deductible? If your deductible is $1000 for example and you are going to be making a claim for $1500, your insurance will only reimburse you $500 because your deductible is the amount you are responsible for paying. By making a claim your premiums may also go up, so ask yourself if you should make a claim or if you should pay out of pocket.

Call your Insurance Broker with questions - your broker works for you and will help guide you through this process. They’ll take the time to answer any questions you have. Our customer support team is here for you Monday to Friday 8am to 8pm and Saturdays 10am-4pm. Give us a call at 1-844-678-7346 if you have any questions, comments or concerns.

*Please note, this article is not intended to be advice. The best advice this blog will give is to call your Broker for advice.

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