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🛡️ Avoiding Insurance Seller Scams

Most of us think of insurance fraud as someone trying to defraud an insurance company. However, another type of insurance fraud can directly affect you when buying a policy.

Insurance seller fraud occurs when a fraudster sells a fake or inaccurate insurance policy. Often, they offer very low rates to attract victims. Once payment is made, the victim receives forged or invalid insurance slips (pink slips).

Victims may not realize the broker was fraudulent until their insurance claim is denied, leaving them to pay out-of-pocket. If the fraudster provided inaccurate information, the victim may also struggle to obtain insurance in the future.

👻 Ghost Brokers

Ghost brokers take payment for insurance policies upfront and then disappear.

• In most cases, they provide a forged pink slip.
• Occasionally, they may even set up a real policy and cancel it without notifying the victim.

🕵️ Fake Brokers

Fake brokers often appear legitimate:

• They may run a real business (e.g., car dealership) and have a physical address.
• They buy an insurance policy in the client’s name and provide a slip.
• To offer lower rates, they often include incorrect information.
• When the victim files a claim, it may be denied due to the inaccuracies.

⚠️ Warning Signs

Be cautious if:

• 💰 The insurance is much cheaper than other quotes. Fraudsters often lure victims with low rates.
• 🧾 They charge a fee for their services. Legitimate brokers earn through commissions, not upfront fees.
• 💵 They ask for large upfront payments or insist on cash payments. You should never pay cash directly to a broker.

✅ How to Avoid Insurance Scams

• 🔍 Verify your agent’s license number with the insurance regulator in your province or territory.
• 📄 Read your policy carefully before signing. Ensure your personal information is accurate.
• 📇 Make sure the policy is connected to your contact information, not the broker’s. This ensures you are contacted if the policy is cancelled or changed.
• 🏢 If unsure about a broker or agent, contact the insurance company directly.
• 📞 You can also contact the Insurance Bureau of Canada (IBC) to confirm if your situation seems suspicious.
• ⚠️ If you encounter insurance seller fraud, report it to the IBC.

This information is provided in collaboration with Sonnet Insurance. Get a home or car insurance quote today.