Beware of Ontario Auto Insurance Fraud

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Remember the old adage - if it's too good to be true then it probably is? Several Ontarians who overlooked this advice fell victim to a serious con when they responded to recent newspaper ads offering cheap auto insurance. This latest insurance scam reported by Ontario Provincial Police has left more than a few Ontario residents financially drained and without auto insurance coverage in case of accident or theft.

Details of the Scam

The fraudulent auto insurance ads have been appearing since February 2010 in free classified listings in Toronto and Ottawa, as well as online classifieds, including Craigslist. The ads offer cheap insurance for all drivers, and occasionally use the name of legitimate auto insurance companies to boost their credibility, as well as company names along the lines of "Arthur and Son," "Smith and Sons," and "Addison and Sons".

When contacted by price-conscious consumers, the scammers will take the insured's personal information, including contact information, driving history and vehicle information. They then provide them with an auto insurance "quote" - which is generally significantly lower than their current insurance premiums. The customer is then encouraged to forward their insurance payment by wire - through Western Union or a similar method.

Shortly thereafter, the fraudulent policy holder is sent a realistic insurance card or slip with their details. Unfortunately, there is no auto insurance coverage to accompany the slip - which would result in serious consequences should there be an accident. The thieves use prepaid, disposable cellular phones, so the Ontario Provincial Police have not been able to track them down. Police are encouraging the public to use extreme caution and discretion when purchasing new auto insurance policies.

Avoiding Car Insurance Scams

In the competitive auto insurance market, where there are countless auto insurance providers, it can be difficult to distinguish legitimate companies from the fraudulent ones, so consumers need to be particularly diligent about doing their research - and ultimately must use caution and common sense when purchasing a new policy.

To avoid this particular scam, consumers need to be on the lookout for the following:

  • Insurance ads claiming that "everyone is accepted"
  • Being provided an auto insurance quote that is unreasonably lower than competitors
  • Requests to forward premiums through Western Union or Moneygram

Before taking out a new policy with any auto insurance broker, take the time to confirm that they are licensed through the Registered Insurance Brokers of Ontario. Insurance companies must be registered with the Financial Services Commission of Ontario. If an insurance provider is not listed with these organizations then they are not a legitimate insurer, and should be reported to the authorities immediately. Consumers are encouraged to call the Canadian Anti-fraud Centre at 1-888-495-8501.

As an added precaution, don't ever send your premium payments by wire - as there is not necessarily a guarantee as to who receives it. This also means that your money cannot be recovered from the recipient. Deals that sound too good to be true likely are, and you need to be particularly diligent in doing your research to make sure that the company you are dealing with is legitimate and reputable. Having fraudulent insurance coverage could result in serious financial liability if you are involved in an accident, so it's worthwhile to take the time to thoroughly check out your auto insurance company

Auto insurance in Ontario is a competitive industry, but when you find an insurance quote that's too good to be true, especially through anonymous advertisements, be cautious! Your best bet to protect yourself is to check reputable sources to ensure that the provider is legitimate. Contacting a regulatory agency is a quick and easy way to make sure that you're not going to be a victim of the perpetrators of these scams.