Ghost Brokers: How to Avoid Insurance Scams

As the world continues to see more everyday transactions completed online, the opportunity for fraudulent business activity has increased. Within the insurance industry in Canada, this has manifested itself within the last year.

Sherif Aly, an Ontario resident not licensed to sell insurance, was arrested in February 2019 and faces charges of two counts of Fraud Under $5,000, Fraudulent Intent, and Falsification of Books & Documents. The charges stem from a driver being pulled over in Port Credit and were found to be in possession (against their knowledge) of an invalid car insurance policy, including fake pink slips.

‘’This is the worst kind of insurance fraud because it leaves victims unprotected and vulnerable to significant financial liability – the exact opposite of what an insurance policy is designed to do,’’ Colm Holmes, president & CEO of Aviva Canada, said.

Read also: What Tickets Affect Car Insurance Rates in Canada

It is illegal to operate a motor vehicle in Canada without proof of legitimate insurance. The fines and degree of charges vary, from province-to-province.

According to Insurance Business Canada, in Ontario – where Mr. Aly’s alleged fraudulent activities took place – the following are repercussions a person can face for not having valid auto insurance:

  • A fine between $5,000 – $25,000
  • Up to one year of driver’s license suspension
  • Seizure of vehicle for up to three months

A second offense will result in criminal charges, as well as a doubling of minimum fines.

The above fines and charges could be the least of a person’s worries, especially if they’re involved in an accident. Additional outcomes include:

  • No protection from lawsuits relating to bodily injuries and damage to the other vehicle(s)
  • No coverage relating to the replacement cost of your vehicle
  • No protection for others in an uninsured car
  • Personal financial liability (such as property liens and wage garnishing)

How to Avoid a Fraudulent Insurance Brokerage

If your quoted insurance price seems to good to be true, it just might be exactly that.

Before you make a financial commitment or sign your insurance documents, research the company and verify that they’re a legitimate insurance brokerage. Online reviews are an excellent indicator of whether a company is legit or not. If a company has hundreds or thousands of customer reviews on Google, Facebook or other review sites, this is great news for you. If a company has minimal reviews or none at all, this should raise a red flag and you should dig deeper into the company’s legitimacy.

In Ontario, you can check your broker’s credentials online using this helpful tool which confirms if your broker is RIBO licensed (mandatory to sell auto insurance in Ontario). You just need their first & last name and/or license number, which any legitimate broker would be more than willing to provide.

You should never give your banking or personal information to a company without being 100% certain of the company’s legitimacy. If you’re uncertain, and your research doesn’t increase your confidence that you might be getting duped by fraudulent activity, then it’s best to look elsewhere and place your insurance business with a reputable brokerage. For instance, Surex only works with verified insurance providers & all our brokers are licensed.

Want to learn more about your current insurance policy or how you might be able to save on auto insurance? Contact us and receive up to 10 car insurance offers for free!

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