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It is mandatory that all drivers in Ontario purchase car insurance. Car insurance protects drivers when they become involved in automobile accidents as well as other protective covered perils in the policy. However, this being said, purchasing auto insurance can also open you up to purchasing fraudulent insurance products. Criminals prey on Ontario drivers to sell them false insurance. This can present several problems for a driver that unknowingly purchased fraudulent car insurance. As all drivers must have auto insurance in Ontario, purchasing fraudulent car insurance even unknowingly, is illegal. Always ensure you purchase your auto insurance from a licensed broker, insurance company, or agent. 

Identifying Car Insurance Scams


It can be very difficult to identify a car insurance scam. There are a couple of ways you can identify car insurance scams such as:

  • Advertisements in Community Flyers or Newspapers
  • A False Insurance Agent or Broker

Advertisements in Community Flyers or Newspapers

Some criminals will advertise in community flyers or newspapers offering extremely low insurance rates. These advertisements are designed to look authentic to lure in prospective victims. Quite often these kinds of advertisements do not identify an insurance company, agent, or broker. If there are any names identified in the ad, typically they are false. If a driver chooses to purchase auto insurance fraudulently through a fake ad, they will not have any type of car insurance coverage and you will lose the money you paid to the individual. If you were to become involved in an automobile accident you would have zero coverage as the policy was fraudulent. So in essence trying to save yourself some money by obtaining “cheap car insurance” could end up costing you everything you own. 

False Insurance Agents or Brokers


Another common auto insurance scam is when an individual portrays themself as a licensed insurance agent or broker when they are not. These individuals will promise to find you the cheapest and best possible rate and they charge a fee for this service. The fraudulent individual will contact insurance companies giving them false personal and driving history information to obtain low rates. The driver then pays the licensed insurance company their annual premium and receives their pink insurance slip in the mail. The driver is none the wiser of what just transpired until something happens and the true facts come out. Always remember that a legitimately licensed broker will never charge you a fee to obtain car insurance for you, the insurance company will pay the broker or agent directly for bringing them the business. This process will also deem your car insurance to be invalid as the information was falsely provided to the insurance company. 

How To Avoid Being Scammed When Buying Car Insurance

There are several things Ontario drivers can do to protect themselves from being scammed when buying car insurance. The following tips will help to protect you:

  • Visit the FSCO’s website for a list of Licensed Insurance Companies in Ontario
  • Double-check to see if the insurance professional you are dealing with is licensed on the Registered Insurance Brokers of Ontario website
  • Only purchase car insurance through a licensed broker and reputable insurance companies
  • Never pay a fee to someone to obtain insurance for you, licensed insurance professionals are directly paid by the insurance company
  • Never pay your insurance premiums through a wire transfer service, this is not how insurance companies operate
  • If someone completes form OAF1 for you, ensure you read it over for full accuracy. Once you sign this document you are agreeing to everything in it. Never sign a blank document as the person can write anything on it at that point. 
  • If you think you have come across some fraudulent activity while purchasing car insurance, report it to authorities

What To Do If You Have Been Scammed


If you think you are being scammed or suspect suspicious activity while purchasing car insurance you should report it right away. Call your local police department and the insurance provider that may have been involved and report what you know. You can also call Crime Stoppers. FSCO also has an auto insurance fraud hotline that you should call to make them aware of what transpired. Make sure you purchase car insurance from a reputable company and a licensed agent or broker to ensure coverage. 

Car Insurance Fraud Scams

The Insurance Bureau of Canada estimates car insurance fraud scams cost Canadians approximately $1 billion a year in additional insurance premiums. Aside from criminals selling false car insurance to individuals are a number of other fraudulent activities that take place pertaining to car insurance. These activities include:

  • Blank Forms
  • Inflated pricing for towing and repairing vehicles
  • Providing false information to insurance companies knowingly
  • Staged collisions
  • Chop Shops

Blank Forms

Never sign a blank form for anyone. It has been found that some disreputable medical clinics have patients sign a blank accident benefit form and then bill insurance companies for treatments or procedures that never took place. Some clinics have also been found guilty of forging doctors’ signatures to bill for fraudulent treatments. 

Inflated Pricing For Towing and Repairing Vehicles

Some tow truck companies and auto repair shops will inflate their pricing when they realize it’s an insurance claim. This contributes to higher insurance premiums for Ontarians. 

Providing False Information to Insurance Companies Intentionally

It has been known that some people are not totally truthful when they are providing their personal information to their insurers. They may choose to provide a false address or provide the wrong make, model of their vehicle to obtain a lower premium.

Staged Collisions

This is when a driver intentionally causes a collision to make it look like the other unsuspecting driver’s fault. A staged collision can also be between a driver and someone they know that is involved in the staged collision.

Chop Shops

This illegal activity typically involves the theft of vehicles, changing the appearance of the vehicle, and the vehicle VIN numbers. These vehicles are then sold to unsuspecting individuals. 

All of these illegal activities drive the cost of auto insurance up for all drivers in Ontario.

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