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Why Fraud Affects Insurance Premiums

Posted By on 08-11-2019
Why Fraud Affects Insurance Premiums

If you’re upset by the rising cost of insurance, consider why fraud affects insurance premiums and learn how to recognize the ways that criminals lie to insurance companies, with the cost eventually being passed on to the consumer.

We all know that proper insurance will cost a premium and it’s not an investment in the traditional sense since there won’t be a return on your money. In fact, you really hope it never comes down to having something happen that requires a claim, since that means there was an incident or accident which created the loss but for which there could be inconvenience and distress, or worse, pain, suffering or loss of life.

Of course, when there is a serious incident or accident that involves a lot of damage and bodily injury or death, you’ll be quite relieved to know that by paying for good coverage, you’ll have good protection and the comfort of knowing that things will be taken care of on your behalf.

Just like anything, there will be a few people who take advantage of a situation for their own personal gain. Consider fraud and all of its negative implications, and why fraud affects insurance premiums. Rest assured, individually and as a whole, the police, the Federal and Provincial Governments, and the insurance industry are working diligently to prevent fraud and prosecute those who are breaking the law.

But, like any other crime, the public needs to be as involved in the prevention of this detestable activity and assist the experts by being involved in the process, learning how scammers and fraudsters work the system, and by reporting wrongdoing when they see it happen.

One of the ways that insurance fraudsters work is to take advantage of circumstances when there’s an accident. Usually the people involved are upset and stressed, or worse, injured, so details of the accident and the subsequent damages or personal injuries may be unknown, overlooked or vague.

11 Ways Of Preventing Auto Accident Insurance Fraud

Why Fraud Affects Insurance Premiums Fake Injuries BlueCircle Insurance

  • If you’re involved in an accident, stay calm, call 911, ensure you are safe from further accidents or injury and deal with anyone who may have been injured.

  • Use your cell phone camera to video record and photograph all the damages done to your vehicle, as well as the vehicles and drivers of anyone else who was involved in the accident. You can also capture images of license plate numbers, driver’s licenses, pinks slips, and other documents, as well as those of eyewitnesses.

  • Do not rush into any decisions or discuss details of the accident with anyone other than the police.

  • Do not admit or discuss who is at fault.

  • Don’t sign paperwork other than a police report.

  • Write down/record every detail of the accident that you can remember at the time, no matter how trivial, as it can help jar your memory when proceedings take time to complete.

  • Use only reputable tow trucks, preferably those that have a municipal license for towing services or who are associated with an automotive assistance group or auto association like CAA or AMA.

  • Be wary of tow truck operators who recommend specific repair facilities without being asked, as this may indicate collusion of some sort with the body shop.

  • Carefully read any documents before signing which are provided by the towing service.

  • Remember, you have the right to have your vehicle towed to the location of your choice, unless directed otherwise by the police, and can ask your insurer to recommend one of their preferred shops.

People are also victimized when purchasing insurance and sometimes only find out that they’ve been defrauded when there’s an accident or incident. 

8 Ways Of Preventing Auto Policy Insurance Fraud

Why Fraud Affects Insurance Premiums Accident Claims Checklist BlueCircle InsuranceWhy Fraud Affects Insurance Premiums Accident Claims Checklist BlueCircle Insurance

  • Only deal with reputable insurance representatives, such as brokers who are registered with the IBAA.
  • Be very wary of anyone offering cheap insurance or making statements or offering policies for premiums that seem “too good to be true”.
  • If in doubt of an agent or insurance representative, use the link at Alberta “Government Insurance Companies” to confirm legitimacy.
  • Be wary of any agent who is requesting a referral fee or other such side payment.
  • Ensure that when applying for auto insurance the document is an approved Alberta SPF 1 or CSIO Alberta – Application For Automobile Insurance.
  • Auto policy applications and forms are legal contracts so read them over carefully before signing to ensure there are no mistakes, particularly if an agent has completed them on your behalf.
  • Never sign blank insurance applications and documents (including claim forms, medical forms, etc.)
  • Do not pay insurance premiums to personal accounts through transfers or money wiring services, as this is not a practice in the insurance industry.

3 Common Ways That Fraudsters Cheat With Auto Insurance.

Why Fraud Affects Insurance Premiums Accident Staging BlueCircle Insurance

1. Staged Auto Accidents

Fraudsters deliberately stage auto collisions so that they can submit insurance claims for fake injuries and auto damage, often recruiting family, friends or associates to participate as a way of making additional money. Damage to vehicles may be pre-existing or be “enhanced” at a later date, in order to exaggerate the claim.

2. Tow Truck Scams

Operators may suggest certain body shops with whom they’re colluding in order to perpetrate fraud. They may also offer to tow your vehicle to a repair shop, then take it to their own facility and charge excessive fees for storage. Operators may offer referrals to other fraudsters in services related to resolving issues with the accident, such as lawyers or other legal services, chiropractors, physical therapists, etc.

3. Body Shop Scams

Repair shops cause additional damage to a vehicle in order to amplify the claim, or they report damage that did not occur and charge for repairs that they didn’t have to make.

How to Report Insurance Fraud

Why Fraud Affects Insurance Premiums Accident Claims Checklist BlueCircle Insurance

When it comes to insurance there are lots of ways to cheat the system and the ones who end up paying for this crime will always be you, the honest and fair average consumer. Someone, who just wants to do the right thing in order to protect themselves and their family from a loss.

Be wary of deals that are too good to be true. If you feel like you’ve been a victim of fraud or suspect others of perpetrating a scam(s), report them.

Call your local police
Contact your insurance provider
Submit a report anonymously to Crime Stoppers ( 1-800-222 8477)
Contact the Insurance Bureau Of Canada to report a crime.

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