Don't Get Scammed Buying Auto Insurance

top ​It's an unfortunate reality – we live in a world where con artists spend their days thinking up schemes to defraud us of our money.
One increasingly common scam involves the sale of "cheap" auto insurance to unsuspecting consumers.
This scheme may appear genuine, but it is intended to trick consumers into paying for auto insurance coverage that is invalid or doesn't exist.

#one False Advertising

Crooks often advertise the sale of cheap auto insurance in community newspapers or flyers. The advertisements may even resemble those of a legitimate insurance company or individual licensed to sell auto insurance.
Typically, these advertisements claim they can find you auto insurance coverage at rates lower than what you have been paying or quoted in the past.
Some advertisements do not identify the name of the insurance company, sales agent, or broker. Where a name is provided, it is probably being used fraudulently, or it is phoney.
Con artists commonly advertise the sale of cheap auto insurance along with other businesses.

#two Two Common Auto Insurance Sales Scams

The scenario
An individual pretending to be a licensed auto insurance agent or broker offers to arrange auto insurance coverage at a rate much lower than what you're currently paying or have been quoted.
The individual charges you a fee for this service.
After getting information about your driving history, the individual impersonates you when calling a licensed insurance company for an auto insurance quote. The individual lies to the insurance company about your personal information or driving history to get a lower rate. For example, he or she will state that you belong to a group that qualifies for a discount or will fail to tell the insurance company about your accidents or traffic violations.
You pay your premium directly to the insurance company and receive a proof of insurance coverage.
The reality
  • The individual you are dealing with is not a licensed insurance agent or broker. A licensed insurance agent or broker generally does not charge you fees — he or she receives payment from the insurance company.
  • Your auto insurance coverage is invalid because the information provided to the insurance company is false.
The scenario
An advertisement promises auto insurance coverage at rates much lower than what you're currently paying, or offers free auto insurance coverage for a specified number of months.
When you call the phone number in the advertisement, you are provided with a quote. When you accept the quote, you are asked to send a partial or full payment for coverage through a transfer or money wiring service. In some cases, the individual you contacted will meet with you to accept a cash payment.
The reality
  • Your auto insurance coverage is non-existent because it was never arranged. The individual you contacted pocketed your payment.
  • The individual you contacted is not a licensed insurance agent or broker.

#three The Harsh Reality

Consumers sometimes realize they do not have valid auto insurance when they fail to receive a proof of insurance card (pink card).
Some consumers discover they do not have valid auto insurance under very serious circumstances, such as when they are stopped by the police and charged for driving without insurance, or when they become involved in an auto accident.
Remember, driving without valid auto insurance, even unwittingly, is illegal. It is your responsibility to ensure that you have valid auto insurance, purchased from a licensed agent, broker, or insurance company.

#four What Can You Do?

Here are some tips:
  • Do not pay a referral fee – licensed agents and brokers do not generally charge you fees.
  • Do not pay your auto insurance premium through a transfer or money wiring service – this is not a practice in the insurance industry.
  • When applying for auto insurance, you must complete an application form called the Ontario Application for Automobile Insurance – Owner's Form (OAF1). If an agent or broker completes the form on your behalf, check it for accuracy – by signing the contract, you are agreeing to the statements made to the insurance company.
  • If you suspect fraudulent activity in the purchase of auto insurance, contact the police.
  • Make sure the individual you are dealing with is legally allowed to sell auto insurance.
  • Check that the insurance company you are dealing with is licensed.
Remember, if something sounds too good to be true, it probably is!
If you suspect that you may be a victim or target of a scam or fraud, you can help put an end to the scam or fraud by reporting it.
As a first step, report the matter to police. You can also make a report to FSCO’s Fraud Hotline. Go to or call 1-855-5TIP-NOW. Tips to FSCO’s Fraud Hotline can be anonymous.

You can also submit an anonymous tip to Crime Stoppers [New Window] (1-800-222-TIPS).
If you want legal advice, the Law Society of Upper Canada [New Window] has services to help you find a legal professional.

In addition to the police, there are a number of other organizations that you can contact for help.

#five Need More Information?

If you have evidence that would identify individuals involved in auto insurance sales scams, or for additional information, please call the Financial Services Commission of Ontario (FSCO) Contact Centre: at (416) 250-7250, Toll-free: 1-800-668-0128, TTY toll-free: 1-800-387-0584.
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