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  • Writer's pictureKathryn Slack

Insurance fraud: is it really a victimless crime?

March is Canada's Fraud Prevention Month, and the best way to prevent fraud is through education & awareness. This article will explore the cost of insurance fraud, who's involved, common types of auto insurance fraud, and how consumers can report it.

What is insurance fraud?

Insurance fraud is defined as any act or omission with a view to illegally obtain an insurance benefit. Fraud is an offence under the Criminal Code of Canada.

If you are caught committing (or attempting to commit) insurance fraud, you will face consequences such as: a denied claim, cancelled insurance policy, higher premiums, denied insurance in the future, or imprisonment for up to 14 years.

The Cost of Insurance Fraud

The view that insurance fraud is a victimless crime is an illusion. Insurance fraud has a direct economic impact, but also affects public safety and strains public services.

  • Economic Loss - The Insurance Bureau of Canada (IBC) estimates that insurance fraud costs Canadians $3,000,000,000 a year. This year, auto insurance fraud alone is estimated to cost $1B. Much of this cost is transferred to consumers through increased premiums.

  • Public Safety and Healthcare - Premeditated fraud such as staged car accidents and arson can put the public at risk of injury or death. Healthcare systems are also strained by people seeking medical attention who don't really need it. Innocent victims drawn into insurance fraud schemes can also experience lasting emotional and psychological effects.

  • Straining Public Services - Police, fire, court systems, and other public resources are strained by responding to fraud schemes, which also costs taxpayer dollars.

Who is involved in insurance fraud?

Anyone involved in the process of obtaining insurance or making a claim can be involved in fraud. This includes consumers, third party claimants, brokers/agents, mechanics, medical professionals, insurance company staff, etc.

Common Types of Auto Insurance Fraud

  1. Staged Accidents

  2. Padded claims ("opportunistic" fraud) - inflated bills, claiming for prior damage

  3. Misrepresentation - providing incorrect information about rating factors such as mileage driven, primary driver, or garage address to reduce the premium

  4. Phantom vehicles - already salvaged vehicles are given false papers and a false VIN and sold to unsuspecting consumers

  5. Repair scams - i.e. faulty airbag or windshield repairs, scammers will use your insurance information to make claims in your name

How do I report insurance fraud?

To report a suspected exaggerated claim, staged auto collision or other insurance crime:


The information in this article is derived from content distributed by the Insurance Bureau of Canada (IBC) and the Insurance Institute of Canada.

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