What is auto insurance fraud and how can it impact me?

Organized crime and fraud-related claims have been on the rise for some time. They drive up insurance costs and create new problems for the targeted drivers.

Recently, there has been an increase in fraudulent claims from staged collisions: accidents deliberately set up to cash in on payouts from insurance claims. To make the collision appear more authentic, fraudsters are increasingly involving innocent drivers.

What type of auto fraud is happening in Canada?

  • Target and bullet: staged collisions in which an unsuspecting car is hit intentionally.
  • Swoop and squat: a driver slams on their brakes, causing the innocent driver to rear-end the vehicle. In some cases, two vehicles are involved in the fraud, causing an innocent third party to rear-end the second vehicle.
  • Drive-down or wave-in: a driver on the road motions for a driver exiting a parking lot to move in ahead of them. The roadway driver accelerates into the merging car once they enter the roadway, intentionally hitting the innocent driver, causing a collision where the innocent driver appears to be at fault.

In these types of collisions, the organizers pay their pre-arranged crash victims, tow truck drivers, witnesses and questionable medical clinics to falsify records to profit from insurance payouts.

Be aware of cars following too closely, suddenly cutting you off, or waving you in, especially if there are three or more adults in the vehicle. If you’re worried about the actions of drivers around you, find a safe spot to pull over and wait to enter traffic when you feel it’s safer.

How can you help fight fraud?

Insurance fraud is a crime and costs all of us in the form of higher auto insurance premiums. Here are a few tips to help you and your family avoid becoming innocent victims:

  • Get to know your insurance policy – Reading, asking questions about and really understanding the specific details of your insurance policy is your first and most formidable defense.
  • Don’t sign anything – Refuse to sign any documents or agree to anything at the scene of an accident. First contact the police to report the accident and then contact your insurance company.
  • Get detailed information – At the scene of an accident, take pictures and get each driver’s name, driver’s licence number, licence plate number, insurance company name and policy number, as well as the names and phone numbers of passengers and witnesses.
  • Report suspicious activity – if you suspect auto insurance fraud, contact your insurance company and the local police.

If you have any further questions, contact your Financial Advisor.