Car Insurance Scams To Watch Out For

What Is A Car Insurance Scam?

Car Insurance Scams are a type of auto insurance fraud where individuals or groups intentionally deceive others to make money from false claims or fraudulent activities. These scams often target drivers directly and can range from staged accidents to fake insurance policies. Scammers try to set up situations where they look like the victim, only to later claim damages and extort money from you or your insurance company. In many cases, they’ll fake injuries, inflate repair costs, or even falsify entire claims, leaving you to deal with the financial and emotional fallout. It’s important for drivers to be aware of these tactics to protect themselves from being exploited.

Keep reading to learn about the most common car insurance scams and how to avoid them.

Right-Of-Way

In this type of scam, the scammer has the right of way but gestures to let you go first. Once you move, they suddenly accelerate to cause a collision. After, they'll deny ever waving you through, making it look like the accident was your fault.

Here are a few common places where this scam can happen:

• At a stop sign or intersection
• When changing lanes
• Entering or exiting a driveway (like at a plaza or store)

This type of scam is common because it's nearly impossible to prove that you saw them wave you through without concrete evidence. 

Staged Rear-Ending

In this type of scam, the scammer will pull in front of the victim and will, in some manner, purposefully cause the victim to rear-end them.

Here are a few methods to watch out for:

• They wait until the victim takes their eye off the road  for any reason and then slams on the brakes, so the victim has no time to react
• In stop-and-start traffic, they will accelerate quickly as if traffic picked up but then slam on the brakes suddenly to catch the victim while they are still accelerating
• A partner of the scammer pulls alongside the victim so they can’t swerve out of the way when the lead car slams on the brakes

Like the Right-of-Way scam, this scam is prevalent for the same reason: it puts the victim in a situation where they are likely to be held at fault without overwhelming evidence.

Sideswipe

In a Sideswipe scam, the scammer will drive next to someone and deliberately turn into the victim’s car to cause the accident.

Here are common scenarios where this could happen:

• Distracted Driver  — when the victim drifts close to or even a bit in the scammer’s lane and does not notice them
• On a Tight Turn  — where it is more common for drivers to drift close to or in another lane
• When Changing Lanes  — when the victim thinks they have space to pull in front of the scammer

The scammer will then claim that the victim was distracted and caused the accident by veering into them. Sometimes, a scammer will try this even if the victim was perfectly within their lane. This isn’t as common as the first two because sideswiping is not as easy to prove that the other vehicle was at fault.

Fake Injuries

Whether in a staged or normal accident, the scammer will act as if they suffered a serious injury to get a larger payout to cover their medical expenses. But since they were not actually injured that seriously, if at all, they pocket the insurance money they receive. They will usually claim an injury that is difficult to notice, such as whiplash or other internal injuries.

Fake Damage

Like the Fake Injury scam, the scammer will claim that their vehicle was damaged far worse than it was so they can pocket the insurance payout. A common tactic for scammers who also stage an accident is to pre-damage the vehicle before causing the collision, so it looks like it had that extra damage as a result. However, some scammers will cause fake damage or claim additional damage after the fact instead.

Fake Victim

With the Fake Victim scam, someone will claim to have been involved in an accident when they were not. They will also tack on fake injuries to go with their claim. They might be working with another scammer who was in an accident, or they might look out for other accidents and then claim they were involved after the fact.

Tow Truck/Repair Shop Referrals

In this scam, a tow truck driver that arrives at the scene of an accident will recommend the victim to a repair shop in an innocent manner, but it will turn out that they have a relationship with them. The shop then pays the driver a fee for referring the victim, and to make up that fee, the repair shop will pull the real scam on the victim by doing the following:

• Overcharging for legitimate repairs
• Making up “necessary” repairs
• Sell your car for profit if you refuse to pay

Sadly, that last part can happen if you and your insurance company refuse to pay their fees, as under the Repair and Storage Liens Act, they can sell your vehicle to recoup the “cost” they incurred in repairing it.

Bad Samaritans

In this scam, the scammer who was not in the accident will approach the victim as a “good Samaritan” and make seemingly helpful suggestions. The scammer might avoid suspicion by posing as an authority figure, like an off-duty police officer, EMT, firefighter, city councillor, doctor, nurse, etc.

The scammer might be fishing for your personal information to scam you later (such as making a false claim), or they might refer you to the following:

• Health clinic
• Repair shop
• Legal service

The scammer would have a similar deal with the businesses they refer to as the Tow Truck scammers mentioned above. If the victim follows their advice, the scammer gets a referral fee, and the victim gets overcharged for their services.

Resources

In Ontario, Canada, if you were the victim or witness of any auto insurance scam like the ones we mentioned above, or if you just want to learn more, you have several resources available to you:

• The Financial Services Regulatory Authority of Ontario (FSRA) is the governing body for car insurance regulation and car insurance fraud. They have many tips and resources available for Ontario drivers
• The police should be contacted if you are in an accident anyway, but you can also seek them out if you think someone is trying to scam you
• Crime Stoppers has a hotline to report crimes such as scams
• You can contact a lawyer about your legal options if you want to take action against a suspected scammer yourself

The most important thing to remember in any car accident situation you find yourself in is to not be pressured or lured into anything. Scammers will sometimes try to threaten, intimidate, or reason you into not calling the police, not reporting to insurance companies, going to a repair shop they want rather than getting the opinion of a place you trust, and so on. In those moments after a car accident where you feel the most vulnerable, try your best to keep a level head, and call the police or a friend for support before doing anything you are unsure about.

Summary

Being in a car accident can be very stressful, even if there are no injuries. Scammers will try to prey on victims when they are vulnerable. We hope this guide can help you better prepare yourself for such an eventuality. If you’re unsure about something, remember to always ask the police or your insurance company for advice on what you should do.

You might also be interested in these guides:

Guide to Car Insurance in Ontario?
What to Do if You Are in a Car Accident?
How to Get Cheaper Auto Insurance in Ontario?