Insurance fraud happens daily. You may think this only occurs in the large cities and has no bearing on any small town insurance company or your own policy, but you would be wrong. The insurance premium you pay every renewal is impacted by the fraudulent behavior of others, it is far more significant than most drivers or homeowners are ever aware.
When you hear the term insurance fraud, what do you think of? We would not be surprised if you probably pictured some large well thought out scam which has been orchestrated by a group of thugs ripping off the multi-million dollar insurance industry and large insurance stock companies of the world. You would be right, but only to a degree. Although some of the fraudulent insurance activity is fairly large scale and consists of a chain of criminals networking together for the sole purpose of ripping off your insurer, there is also a large portion which happens right in your neighborhood and may involve co-workers, friends or your local repair garage.
Insurance Fraud comes in many shapes and sizes, some more severe than others and some pretty mediocre by most standards but nonetheless still fraudulent.
Staged Auto Accidents
Dishonest drivers lure innocent motorists into an auto crash. Although damage may be minimal, crooks make claims looking for large settlements for fake injuries and excessive damage that they may inflict on the vehicle themselves.
Existing Damage Included
Drivers involved in an accident claim that existing damage was part of the accident in order to include it in the garage repair estimate for the insurer to assume the cost (also happens with property insurance claims for flooded basements when additional items are intentionally placed in the water to be damaged or wind damage when a roof of poor repair has only limited damage from the windstorm itself)
Repair Garage Escalated Repairs
The repair garage accepts a vehicle with minimal to mild damage and under the privacy of their shop create further damage to escalate the costs for repair that the insurance company will be required to pay them for parts and labour (also applicable to home repairs for professionals or contract work covered under an insurance claim)
False Information on an Application
Very common insurance fraud that many are guilty of and goes undetected for the most part. For Example, questions on an auto insurance application are intended to determine the appropriate insurance premium for each driver and automobile based on criteria regarding driving records and vehicle details. Guess how many people give a false answer to these questions hoping to lower their premium or deceive the insurer? (should we mention that people also provide false information on property or commercial applications for insurance too)
Automobile Use (including distance you commute one way)?
Estimated Annual Driving Distance?
Any existing Unrepaired Damage?
Has the vehicle been Modified/Customized?
Percentage of Vehicle Use by Each Driver?
Any other persons in the household or business licensed to drive?
Has any drivers license, vehicle permit etc, issued to the applicant or to any person in the household or business been suspended or cancelled in the last 6 years?
Has any insurance company cancelled automobile insurance for the applicant or any listed driver in the last 3 years?
Any previous accidents or insurance claims?
Any history of driving convictions for each driver?
As a community we are encouraged to report criminal activity, this includes anyone involved in, or an activity, which you believe to be insurance fraud. However, as a community in this day and age, we also tend to mind our own business and ignore what we see and hear going on around us. Like anything else in life, I guess the best advice is to choose your battles wisely. But realize that the consequences of these actions by others do affect you.
If you have witnessed or have information about insurance fraud or a potential crime, you can:
File a report with local police and/or provincial or territorial Crime Stoppers organization.
Make an anonymous call 24/7 to 1-877-IBC-TIPS (422-8477)
If you are in the market of buying a new or used automobile, there is always plenty to consider. Some of us may be spontaneous and impulsive when we instantly fall in love with a vehicle and we become quick to close the deal, many others prefer to take their due diligence and prolong the shopping cycle.
A power outage can happen in any season and for multiple reasons. Often, high winds are a factor, but an auto accident or other sources can result in a damaged transformer leaving thousands without electricity. The reach can vary from only a section of your neighbourhood to an entire city or region and although your children may be disappointed that the television or internet is unavailable, there are much bigger concerns that you will need to contend with while the hydro is down. Will you be prepared?
So, your hobby has turned to a passion; you have gone from engaging in your favourite pass time for fun and perfected it and now you make some money on the side for it. Good for you! Congratulations on being self-employed, or at least partially.