Area of Law: Insurance Law
Answer # 2797
What is insurance fraud?Region: Ontario Answer # 2797
According to the Insurance Bureau of Canada, in the insurance industry, general insurance fraud costs insurers, policyholders and Canadians over $1 billion each year.
Fraud comes in many forms and the fraudsters are not always the likeliest suspects. While organized crime and gangs are significant perpetrators of fraud, ordinary law-abiding citizens may also be tempted to make inflated or illegitimate claims for insurance benefits.
The Insurance Bureau of Canada says fraud can include these situations:
- Knowingly lying on an insurance application
- Claiming previous damage to a vehicle, along with damage from a new collision
- Claiming non-existent injuries after a collision
- Submitting health care claims after a person injured in an accident has recovered
- Making an injury or damage claim for a collision that never happened
From home insurance to medical insurance to business insurance, fraud is unfortunately commonplace. For example, individuals may not be truthful in revealing existing medical conditions while completing life insurance applications. If a claim is later made and evidence surfaces that the condition was known beforehand, the insurer may void or cancel the claim.
The penalties and ramifications for those caught committing fraud can be serious. Upon detecting fraud, for example, an insurer will likely refuse all coverage, report the incident to the police for criminal prosecution, and may sue in civil court for recovery of any administrative costs or actual payouts associated with the fraud.
If you suspect a case of insurance fraud and wish to report it, you can submit an anonymous tip online at the Insurance Bureau of Canada, or call their toll free tip line at 1-877-422-TIPS (8477). Visit ibc.ca for more information. For legal help, contact a lawyer.
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