With insurance fraud on the rise across the country, we want to arm you with the information you need so you can recognize potential scams and make smart choices, especially when it comes to buying insurance. You may have heard about insurance seller scams (often run by people referred to in the news as 'ghost brokers') and how these are becoming more and more common. These scams can lead to no end of trouble for their victims, from wasted money and denied claims to police charges and vehicle suspensions. Learn how you can avoid insurance seller scams and make sure you're buying a legitimate policy.

What is an insurance seller scam?

An insurance seller scam usually involves an unauthorized person acting as an insurance broker or agent and selling fake insurance policies. It's a scam because the buyer is unaware that the insurance policy they're paying for is fake and doesn't actually provide any coverage. The people who run these scams are often referred to as 'ghost brokers.'

What happens if you buy a fake insurance policy?

Besides wasting your hard-earned money and accidentally supporting criminal activity, these are just a few of the issues you could face if you unknowingly become a victim of an insurance seller scam:

  • You won't have the coverage you need in the event of an emergency (and you might have a rude awakening when you try to make a claim and the insurance company has no record of your policy!)
  • You could be charged by police for driving without insurance if you have a fake pink slip or fake car insurance policy, which could result in your vehicle being impounded, a licence suspension, and a hefty fine
  • You'll have a lapse in coverage for the period of time when you thought you had insurance, which could lead to higher premiums when you end up getting a real policy

How to spot a potential insurance seller scam

These are a few telltale signs of potential insurance seller scams:

  • You're offered a premiumopens a pop-up with definition of premium that seems too good to be true (this one can be a little tricky since rates vary slightly by insurer, but if you're wondering why a rate seems especially low, it's worth doing a little research about the company)
  • The name of the insurance company on your policy or pink slipopens a pop-up with definition of pink slip pink slip is different from the name on the insurance company's official website
  • The broker charges a fee to provide you with a quote
  • The broker will only accept payment in cash
  • The broker asks that payment be sent through an electronic or wire transfer, or to an unidentified post-office box

Learn more about insurance seller scams on the Insurance Bureau of Canada's website.

How to find a legitimate insurance seller

It's important that you buy insurance from a legitimate source, whether that's a licensed broker, an agent from a specific company, or an insurance company that sells directly to customers. Keep these tips in mind when you're shopping for insurance:

  • Ask for recommendations from trusted friends or family
  • Contact your provincial insurance brokers' association and ask about brokers in your area
  • Use the Insurance Brokers Association of Canada (IBAC)'s online broker directory to find brokers who are members of the IBAC
  • Visit the website of a specific insurance company and use their online broker directory to find a legitimate broker who sells their policies
  • Once you've received a quote, do some research on the company you're thinking of going with — make sure the name listed in the quote matches the name on their website and check their broker or agent directory to make sure you're dealing with an authorized seller

Shopping for insurance right now? Find a licensed broker near you today using our handy online directory. Brokers can shop around for you and find the best coverage for your situation — and yes, that usually means getting you quotes from multiple insurance companies so you can take your pick.

If you believe you've been in contact with someone who is selling fake insurance policies, please take the time to report the crime.


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