Vilkhov Law firm has been representing those facing insurance fraud accusations in Ontario for many years. It is always advisable to consult with our experienced insurance fraud lawyers before speaking with an insurance investigator.
Our legal team has also been rigorously defending the interests of individuals and businesses subjected to insurance fraud. At Vilkhov Law, we have deep knowledge of insurance fraud patterns, helping our clients to identify fraudulent behaviour and avoid losses.
What is Insurance Fraud
Insurance fraud in Canada is broadly defined as any act committed with the intent to obtain payments from the insurer fraudulently. Insurance fraud has many forms and can be committed in relation to all types of insurances. These include:
- home insurance fraud,
- car insurance fraud
- social insurance number (SIN) fraud,
- life insurance fraud, etc.
Types of Insurance Fraud
The opportunistic insurance fraud presumes inflating the insurance claim using a legitimate loss. Examples include:
- claiming compensation for vehicle damage, which pre-existed before the collision,
- misrepresenting the condition of the vehicle or the value of installed components,
- exaggerating injuries after the collision,
- exaggerating the severity of a patient’s medical condition by a medical professional,
- extending patient’s recuperation time,
- offering or accepting medical services which are unrelated to the insured injury.
Pre-mediated insurance fraud occurs when someone stages an accident or otherwise creates conditions to claim insurance compensation. Examples of such insurance fraud include intentionally causing a vehicle collision, intentionally burning property or vehicle, or making claims for an event that didn’t happen. Such schemes also include cases when someone tries to avoid paying insurance premiums, for example, by not reporting all licensed drivers, failing to report pre-existing medical conditions, reporting false address, etc.
Although most insurance fraud is committed against the insurers, insurance seller scams targeting consumers are just as serious. In this scenario, scammers may fish for personal information or misrepresent themselves as insurance brokers selling either forged or real insurance policies and cancelling them without customers’ knowledge. In addition to their lost cash funds paid to fraudsters, the victims of this type of insurance fraud remain with no insurance coverage when they actually need it.
Signs of Insurance Fraud
Like other types of fraud, cases of insurance fraud are not always easy to detect. You might be witnessing an insurance fraud when you are:
- offered to sign a blank accident benefit or other documents,
- advertised with staged collision facilitation,
- offered insurance policies at a much lower rate than the average one on the market,
- subjected to aggressive sales tactics,
- presented with unreliable or suspicious contact information.
Meanwhile, the insurers have their own system of red flags to identify potential insurance fraud by the customers. The following might be the signs of possible insurance fraud by customers:
- excessive pressure on immediate settlement,
- questions to agents before the loss,
- sharp increase of policy limits before the loss,
- reluctance to meet for an interview, rehearsed story, excessive documentation.
How to Prevent Insurance Fraud
The best way to avoid unintentionally committing insurance fraud is to understand the signs and elements of crime described above. It is also important to watch out for signs of insurance seller scam, keep personal information safe from scammers and avoid signing blank insurance forms.
Those who witness the above-mentioned signs of potential insurance fraud or suspect being victims of identity theft should immediately consult an insurance fraud lawyer and report their suspicions to the authorities.
Insurance Fraud Cases in Canada
According to the information published on the Insurance Bureau of Canada website, insurance fraud costs Canadians more than $1 billion a year due to increased insurance premiums caused by false or exaggerated claims.
In Canada, the insurance fraud cases have become so numerous that the Insurance Bureau of Canada (IBC) has outlined the five most common types of insurance fraud to watch out for:
- staged collision when a driver stages an accident with an unsuspecting driver making the latter at fault,
- inflated tow, store, and dent when unscrupulous auto repair shops and towing companies artificially increase the bills to the insurers,
- insurance fraud cases including blank form when medical clinics ask patients to sign blank accident benefit forms or bill the insurers for not rendered services,
- fake news involving individuals who reduce their risk profile by providing false information about their address, or their vehicle,
- hot cars insurance fraud when stolen or technically dangerous vehicles are sold under a false vehicle identification number.
Meanwhile, the global COVID-19 pandemic situation has led fraudsters into devising new types of insurance fraud. These include insurance fraud associated with telemedicine, involving health care provided remotely, cyber fraud and data breaches.
Penalty for Insurance Fraud
Those accused of insurance fraud in Canada face a number of consequences, including criminal penalties and civil suits. Criminal liability may include various penalties and incarceration depending on previous criminal records and other circumstances. The civil liability may include compensation for any costs or damages claimed by the insurer.
In addition, insurance companies may refuse to sell insurance to individuals and businesses involved in insurance fraud. Such consequences may be particularly devastating for entrepreneurs as they would no longer be covered by professional liability insurance.
How to Report Insurance Fraud in Ontario
Those who suspect or witness potential insurance fraud can report it through a number of channels, including contacting the local police department or reporting the crime to the Insurance Bureau of Canada either by phone or online.
When to Call an Insurance Fraud Lawyer
Allegations of insurance fraud can have severe repercussions on career and general well-being. They can result in criminal charges, criminal records, employment termination, and civil action by the insurance company.
Those who were approached by an insurance investigator or facing insurance fraud charges or a suspecting or witnessing an insurance fraud are advised to contact Vilkhov Law legal team without delay.