6.3.10 Insurance fraud

From: Financial Consumer Agency of Canada

"When an insured person makes a false claim, no one gets hurt." True or false?

False! Insurance fraud hurts honest policyholders by driving up the cost of insurance for everyone.


  • Insurance fraud: Any act committed with the intent to fraudulently obtain payment from an insure

Insurance crimes range in severity, from slightly exaggerating claims to deliberately causing accidents or damage. Examples:

  • A person who is involved in a collision claims more damage than was really done to the car.
  • A person deliberately sets a fire in order to receive payment for damages.
  • Someone fails to disclose information, such as a previous medical condition, to obtain insurance that he or she would not qualify for.
  • A health care provider that bills for services that were not provided.

The consequences

Insurance fraud is a crime, and there are serious consequences:

  • If a false claim is proven, the insurance company won't pay the claim and may cancel the policy.
  • If a false claim is made, the insurer can sue for any costs and damages.
  • A false claim can result in jail or large fines, and a criminal record that can affect the future prospects of anyone found guilty.
  • Insurance companies may refuse to sell insurance to people involved in false claims.

How to protect yourself

Insurance scams can take many forms. Here are a few tips on how to avoid them:

  • Be careful if a salesperson pressures you to replace the insurance you have with something else.
  • Beware of any email message that claims to be from your insurance company and asks you to confirm or give personal information. It is likely an attempt at identity theft.
  • Do not pay your premiums through a money transfer or money wiring service.
  • If you suspect that an insurer or service provider is engaged in an insurance scam, contact your provincial or territorial insurance regulator.
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