Scourge |
Theft of automobiles and property |
Purchasing used vehicles
Winter Tires |
Insurance Fraud
Insurance Fraud
What is insurance fraud? It's any omission or intentional action to illegally obtain an insurance indemnity. There are a number of types of fraud:
- False declaration: for example, failing to declare that you use your vehicle to go to work so you'll get a lower premium.
- Exaggeration: for example, claiming 500 compact disks when you really only had 100.
- Intentional loss: for example, organizing the theft of your own vehicle or setting your own house on fire in order to receive an indemnity.
- False claim: for example, insuring a "paper car" (one that exists only on paper) and declaring it stolen to collect the indemnity.
The consequences of fraud
Insurance fraud in Canada costs an estimated $1.3 billion a year. That's 10% to 20% of the total amount paid in indemnities by insurers-and all policyholders pay the price. For example, on a $500 premium, $50 to $100 is used to pay fraudulent claims.
Policyholders caught attempting insurance fraud risk:
- losing the entire indemnity they would have been entitled to had they been honest. For example, a victim of theft who claims $20,000 in damages as well as a $1,000 digital camera he didn't own risks being refused the entire indemnity, including the $20,000.
- trouble getting reinsured. Very few insurers are inclined to insure someone who has previously committed insurance fraud.