What Is Insurance Fraud?
And How To Combat High Insurance Premiums
Insurance fraud is a serious crime that effects everyone by severely increasing insurance rates.
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Insurance Fraud Definition
Insurance fraud is a criminal offence under the Federal Criminal Code of Canada. Insurance fraud involves the act of intentionally falsifying a claim in an attempt to defraud an insurance company with the expectation of receiving income when not entitled to payment from the benefits being sought.
Common Instances of Insurance Fraud:
- Falsifying information about how a loss occurred.
- Submitting fraudulent car accident or damage and repair claims.
- Including already existing, prior damage to an automobile when filing a claim.
- Concealing pertinent information related to prior accidents, traffic violations, automobile-related civil or criminal convictions (i.e. DUI, speeding, negligent driving etc., claims, policy cancellations or non-renewals, additional insurance in force, medical history, and receiving payments for professional treatments never rendered.
How Does Insurance Fraud Affect Premiums?
Fake claims can encompass anything that cannot be proven when making a claim, such as headaches, stress, and pain. According to Aviva Canada, insurance fraud is estimated to cost the province approximately $1.2 billion per year, resulting in inflated Auto Insurance rates in Ontario (Bliss, 2016).
These higher rates occur because insurance companies must offset company financial losses, therefore, consumers bear the brunt with higher rates (see also Toronto Auto Insurance rates: Why are they so high? And how can you lower yours?).
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What Happens If You Are Caught Committing Insurance Fraud?
If you are caught committing or attempting to execute insurance fraud, your claim will be denied, your policy may be cancelled, you may be forced to pay higher premiums, you may be denied any potential requests for insurance, and you may be criminally charged and punished with up to 14 years in prison (Financial Services Commission of Ontario, 2016).
A textbook example of insurance fraud occurred with one of My Insurance Broker’s partners, Aviva Canada, when it was revealed that a paralegal and staff at a Northern Toronto wellness clinic had been captured on hidden camera encouraging Aviva’s undercover patients to commit insurance fraud via fake claims. Charges have been laid and a verdict is pending (Bliss, 2016).
What Can You Do to Combat Fraud?
- Carefully read your insurance policy. Your insurer will provide detailed information regarding your coverage, rights, and your responsibilities.
- Reporting every incurred loss, damage, or accident.
- Reviewing your files and claims to ensure accurate information.
- Never, under any circumstance, sign blank insurance claims forms.
- Thorough record keeping is essential, especially in the event of an accident. Collect any important information related to people involved in an incident (name, address, phone number, licence plate, driver’s licence number, policy number, and any other specific information.
- Demanding specific repair and medical bills, and vigilantly reviewing those documents to be certain you collected all goods and services rendered and bills you are responsible for paying.
- Looking over your policy’s payment information from your insurer to confirm all treatments, medical practitioners/providers, and dates are correctly documented.