What is a “Ghost Broker”?
March 19, 2019
What Is a Ghost Broker and How Can I Protect Myself?
You might have seen it in the news, a new form of car insurance fraud is on the rise in the GTA and their name is as spooky as their fake services. “Ghost Brokers” are unlicensed and illegitimate insurance providers who promise cheaper insurance when in fact, they take their clients money and provide no coverage at all. They advertise online via social media and sites like Kijiji and through word of mouth.
In the digital age, there are many insurance providers that advertise online (including us!) but there are some simple ways to protect yourself and ensure you are purchasing legitimate coverage.
Top ways to spot a “Ghost Broker”
The Price Is Too Good To Be True
Ontario has some of the country’s highest car insurance premiums. If the price is too good to be true, or they offer a low price even when you have accidents, tickets or claims on your record, you should be wary. Right now drivers in Ontario are vulnerable. It is becoming more and more expensive to drive and you may be tempted to turn a blind eye to sketchy behaviour to save money, however auto rates in Ontario are regulated by the Ontario government and you probably won’t find legitimate coverage at highly discounted rates.
The Sales Person Insists on Cash Payment
No legitimate insurance broker will insist on cash payment and most people in Ontario pay insurance premiums by credit card, direct withdrawal or cheque. Cash payment is untraceable and puts you at risk for retrieving the money if you’re a victim of fraud.
They Insist on Meeting Outside of an Office
While there are many legitimate reasons to hold a meeting outside of the office, if the sales person refuses to provide a legitimate business address where you can meet, asks you to meet them in a parking lot or somewhere that feels unusual you should act with caution. If they are legitimate they will have no problem meeting you at their company’s office.
Check their Credentials and Employer
Insurance brokers in Ontario are regulated by RIBO (Registered Insurance Brokers of Ontario). If you are unsure about their credibility you can search their name in the RIBO database. You should also ask them which brokerage they work for. Google that firm and confirm that the person actually works there. If they claim to be “an independent broker” or “work for themselves” as a “one man/woman show” they are still required to have a sole proprietorship registered with RIBO. Again, confirm with RIBO if anything seems out of place.
You Are Not Required to Sign and Complete an Application
All insurance companies require brokers to provide completed and signed applications from the client. If the sales person claims no application is required and you don’t sign documents, you are likely being scammed.
They Insist on Providing Documents Themselves – Or Documents Never Show Up
Documents provided by an insurance broker are meant to be temporary. Full policy documents and permanent pink slips are provided to the client directly by the insurance company. If the person you are purchasing from gives you documents instead of receiving them from the insurance company you may have been duped. Most insurance companies mail policies and pink slips to clients between 4 days and 6 weeks after the policy has been purchased. If you receive documents from the seller you should call the insurance company or brokerage listed on them and check that the policy number is in fact valid. If the documents never come from the insurance company, you should stop driving until you can confirm that you hold a valid policy.
With today’s technology, it is easier than ever to create fake documents. Spotting fake pink slips can be tricky some key details to check for include:
- The Insurance Broker or Agent Name
- Issuing Insurance Company
- A Valid Policy Number (Check validity by calling the Insurance company listed on the Pink Slip)
If you are scammed by one of these “Ghost Brokers” not only do you lack proper coverage, you’re also at greater risk. If you are pulled over a police officer notices you have a fake pink slip you could face a fine of $5,000, even if you didn’t know they were fake. This type of ticket also has a significant impact on future legitimate insurance rates. In Ontario, car insurance is mandatory because it protects everyone on the road in the event of an accident. If you do not have proper insurance, you could also be on the hook for hundreds of thousands of dollars in the event of a serious accident even if it’s not your fault.
What do to if you discover a “Ghost Broker”
If you discover you’ve been scammed by a “Ghost Broker” you should first report the fraud to the police by calling your local police department’s non-emergency line. You may also want to file a report with FSCO’s Auto Insurance Fraud Hotline.
If you have fraudulent insurance, you are NOT insured and it is illegal to drive. You should not drive your car until you can get legitimate insurance.
As fraudsters become more sophisticated it is important to be on alert for red flags. Working with a legitimate insurance broker, agent or direct writer is the only way to guarantee legitimate insurance coverage.
Related Insurance Resources
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The Ontario Government has introduced a reform on auto insurance. These changes mean more choice for the consumer, but with more choice comes more responsibility.