Thousands of people drive around with invalid motor insurance policies, even without their realization. Such people buy their insurance policies through illegal insurance advisers commonly referred to as "ghost brokers";. Unscrupulous intermediaries use their cunning ways on clients who lack experience in the sector such as young people or visitors in the country. The vehicle insurance industry is continuously growing and therefore provides a very lucrative deal for the fraudsters, who see the potential of pocketing large sums of money. The insurance policies usually feature attractive deals that trick consumers into paying for insurance policies that do not even exist. The most common swindle in the car insurance field features cheap vehicle auto insurance.

The fraudsters promise their customers large savings on their insurance policies through advertisements featured in local newspapers, flyers distributed outside shopping centers and classified websites like Gumtree. The crooks approach cash-strapped drivers with claims of very low rates that one is very unlikely to have quoted in the past. Some of these advertisements do not feature basic information like the name of the insurance company, broker, or the sales agent. This should be a clear warning that the company is a fraud. In cases where such details are provided, they are usually fraudulent. They often obtain these details by giving false information to insurance companies. Sometimes the policy certificates are even forgeries. Drivers should think twice before settling for an insurance policy that offers large financial benefits, although a good number fall prey to such scams due to desperation. Since having a motor insurance policy is compulsory, the fraudsters target the poor and vulnerable members of the society. The number of fraudulent insurance policies may be much more than estimated because people may not even realize until they actually need a cover from the insurance policies.

The Con Artists

Auto insurance scams take many forms, in one of the cases the fraudsters would pretend to be a licensed auto insurance agent. They offer to provide insurance coverage packages at much lower rates than the ones clients are likely to have encountered. They charge for the service and seek information about the driving history of the clients. They later contact licensed insurance companies and give the personal details of their clients. They usually alter the information given by clients such as the driving history and the personal information. They give information that would classify the clients for lower insurance rates. People who encounter such crooks usually fail to receive full coverage in relation to what they had paid for, when they encounter accidents.

The Escapists

There are fraudsters who are worse in the sector. They feature fraudulent yet promising advertisements in print media and provide a contact number. They give a quote to the customers who contact them; those who accept the quote are requested to send either partial or full payments to the insurance agency. Some also accept cash payments by arranging meetings with their clients. Such crooks disappear with the money without delivering the auto insurance policies.

The Referrers

Some vehicle repair bodies pay tow truck drivers to tow their damaged vehicles in the trucks. This business is illegal although many tow truck drivers are either owned or controlled by vehicle repair shops. Many insurance companies do not deal with such shops. Shops that do not deal with insurance companies would transfer vehicles to other shops for towing. Before doing this they first charge their clients for the towing service, storage and even other administrative fees. The charges can go as high as thousands of dollars and if clients refuse to pay the money, they resell their vehicles to cover the fees. The referral fees pile up and the clients are the ones who end up catering for all these costs. Clients should avoid getting into such traps by checking for municipal licenses numbers, police contracts, and ensure the tow truck is associated with reputable affiliate companies. They should also ask for all the information regarding to the towing such as the repairs shop and the towing process. Reading all the outlined details carefully before signing the forms is very essential.

The harsh reality however is that most of these customers fail to realize that they are dealing with fraudsters. The first warning should be the great savings offered which even appear unrealistic in some cases. The second proof should be identified with the payments demanded. Licensed insurance agents or brokers normally do not charge a fee for their services, as they receive their payments from insurance companies. Drivers should avoid paying insurance policies through money transfer or wiring services as legitimate insurance organizations do not operate this way, this is the third signal of a fraudulent insurance policy. Such insurance policies are fraudulent as they offer less packages than the clients either deserve, or completely fail to deliver the packages. Those offering fewer packages give false information to insurance companies while the ones that fail to deliver their packages are non-existent. Some drivers may realize that they do not have a valid insurance policy if they do not receive proof of their insurance, which in most cases is the pink card. Others realize their situations a little too late, like after being stopped by the police, when charged for driving without insurance or even worse after they have encountered an accident.

Driving without a valid auto insurance policy, whether knowingly or unwittingly is illegal. Drivers should be careful when selecting the vehicle insurance that suite them best, as the law does not compromise any illegal offense. Drivers should not allow agents or brokers to complete the insurance forms on their behalf, if they do, the drivers should confirm the accuracy of the details before signing the forms. They should ask for proof of whether the legality of the individuals they are dealing with. If by any chance clients suspect that they are dealing with fraudsters, the initial step should be to contact the police.

Insurance swindles cost everyone whether directly or indirectly. Informed consumers not only avoid vehicle insurance frauds, but also largely contribute to the elimination of the scams in the society. Clients should report any fishy things they identify with vehicle insurance agents or brokers so that the government takes the appropriate legal action against them.

Resources:

http://www.fsco.gov.on.ca/en/auto/brochures/Pages/brochure_scams.aspx

http://www.fsco.gov.on.ca/en/auto/Pages/targeting_fraud.aspx

http://www.fsco.gov.on.ca/en/auto/brochures/Pages/brochure_scamtips.aspx

http://news.ontario.ca/mof/en/2011/07/cracking-down-on-auto-insurance-fraud.html

This article was written by Kanetix.ca - Canada's leading online insurance quote comparison service. Since 1999, Kanetix has helped millions of Canadians save time and money on insurance. The article below was inspired by Kanetix's previous article on Top Five Botched Insurance Frauds Of 2005.