Honesty is the best policy when it comes to filing insurance claims, and for good reason. Insurance crime has a real and damaging impact on Canadians. Need proof? According to the Insurance Bureau of Canada (IBC), insurance fraud costs insurers and policyholders about $540 million a year. Add that to related costs for health care, police, emergency services and court costs and the damage amounts to over $1 billion.

In fact, the IBC estimates that we’re all paying about 15% extra for general insurance in order to cover fraudulent claims. 

What does insurance crime look like?

In some cases, not what you might expect, but here’s what to look out for.

Little white lies. If a person states on his insurance application he will not be using his vehicle to commute to work when in fact he will be, the insurance firm cannot charge the appropriate premium. This is called misrepresentation, and the person may find himself in a situation where his insurance policy doesn’t respond to a claim.

Exaggerating the truth. When filing a claim, people sometimes try to make a few extra dollars by exaggerating injuries or inflating the value of their lost or stolen property. Not only is this behaviour illegal, it could lead to losing coverage altogether or even criminal charges.

On the job. Tow truck drivers, repair shops, paralegals, lawyers, health care workers and other professionals have been caught committing a variety of insurance crimes. Sometimes they charge for services they didn’t provide or they take advantage of people when they’re vulnerable.

Behind the wheel. On average, 500 vehicles are stolen every day in Canada. As an insurance consumer, you end up paying an average of $48 annually in the form of higher premiums to replace these vehicles. Other fraud perpetrators deliberately stage vehicle collisions to cash in on insurance payouts, while others sell phony insurance coverage to drivers. 

Why should you be concerned?

Insurance crimes cost policyholders in the form of higher premiums. We are all affected once the increased risk is spread amongst the population. Unfortunately, innocent people pay a share of these costs as well. 

Combat insurance crime

Now that you know how offenders operate, you’re well on your way to encouraging fair insurance practices. Here are some tips to help you protect yourself:

• When talking to your insurance company, always provide truthful and complete information regarding the item being insured.
  
  
• If you’re involved in an insurance claim, make sure bills are accurate, medical treatments are necessary, and always read forms thoroughly before signing them.
  
  
• If you’re in an accident, take notes of license plate numbers, the number of passengers in vehicles and be sure to get a copy of the police report.
  
  
• If you feel pressured to go to a specific body shop, paralegal or medical professional, stand up for yourself and make your own choices. Contact your insurance company for a list of preferred auto shops or professionals.

Step up and report

Too often, insurance crime is allowed to continue because it seems victimless. It is not. Not only do we all pay in the form of increased insurance premiums, perpetrators who are caught may pay restitution, or even serve jail time. To report insurance crime, call 1-877-IBC-TIPS or submit a tip online. For more information about insurance crime visit Insurance 101.