Believe it or not, insurance fraud costs the insurance industry approximately $3 billion each year according to the Insurance Bureau of Canada. When most people think of insurance fraud, they typically think of organized groups who stage automobile collisions in order to claim medical benefits. But there are other types of insurance fraud that can be just as costly to the insurance industry and ultimately to you, the buyer of an insurance policy.
For example, consider the person who has been rear-ended in an auto collision. He now has a small dent to his bumper. However, when he makes a claim to his insurance company, he not only claims this “new” dent, but also includes damages already existing on his vehicle prior to the accident. Claiming these pre-existing damages constitutes insurance fraud.
Or what about the person whose home has been burglarized? She has included on her insurance claim a top-of-the-line Blu-Ray disc player, when in fact a considerably less valuable 15 year-old VCR was stolen. These types of situations are known as inflating claims and are also considered insurance fraud. If you make these types of claims, you can be penalized. You can learn more about this topic in our article on "The Consequences of Lying to Your Insurance Company."
What many consumers don’t realize is that we all feel the impact of insurance fraud through our premiums, which the insurance companies collect to recoup their losses. It’s therefore in everyone’s best interest to reduce insurance fraud. The Insurance Bureau of Canada has a confidential tip line for reporting insurance crime at 1-877-IBC-TIPS.
In addition, if you are convicted of insurance fraud, it stays on your record for 10 years. This places you in a high risk insurance category which means you will be paying extremely high premiums for auto insurance for the next 10 years. More importantly, for homeowners or tenants (renters) insurance, if you are convicted of insurance fraud, you may not even be able to find an insurance company to insure your home at all.
Although you cannot control what insurance companies pay out in claims, you can control how much you pay for in premiums for car and other types of insurance. Comparison websites like InsuranceHotline.com can help you find the lowest rate from over 30 competing insurance companies in minutes and for free, saving you both time and money.