There have been reports in Ontario of “Ghost Insurance Brokers” selling fraudulent insurance policies to unsuspecting victims, causing financial loss.

A “Ghost Broker” is a person or an entity that fraudulently sells fake or non-existent insurance policies. They typically pretend to sell car insurance, although they can be involved in other types of insurance coverage as well.

Ghost brokers exploit consumers by offering cheap policies that look legitimate, but when an accident occurs or a claim is filed the victim discovers that the policy is either placed with a non-existent insurance company or there is no record of the policy being placed with the insurance company at all.

How Do Ghost Brokers Operate

• Cheap Insurance: Ghost Brokers often advertise policies at a price below what the legitimate insurance companies charge. This attracts price-sensitive consumers who are looking for a cheap deal.
• Fake Documentation: They provide fake or altered documents, such as insurance certificates or pink slips, which may appear to be from a legitimate insurer, even though the policy is non-existent or invalid.
• Misleading Information: Ghost brokers may use fake addresses or give misleading details about the insurance coverage to appear legitimate.
• Fake Claims: In some cases, they may take money from clients and never actually submit the policy to any insurer, leaving clients unknowingly uninsured.

How to Protect Yourself from Ghost Brokers

Verify the Broker’s Legitimacy: Check their credentials. Ensure the broker or company you are working with is registered and licensed with the appropriate regulatory body. In Ontario, insurance brokers are regulated by RIBO (Registered Insurance Brokers of Ontario). Insurance companies are regulated by the Financial Services Regulatory Authority of Ontario (FSRA).

Do Your Research: Check the policy details. If a deal seems too good to be true, it probably is. Always read the fine print of an insurance policy and confirm details directly with the insurance company.

Inspect the documents carefully: Watch for inconsistencies or errors in the policy documents, such as incorrect company logos, spelling mistakes, or unusual formatting.

Be Cautious of Low-Priced Offers: Avoid deals that seem significantly cheaper than other options. Ghost brokers often lure people with lower-than-market insurance premium prices, but this is usually a red flag.

Avoid Paying in Cash: If the “broker” insists on cash payments, take this as a strong warning sign. Legitimate brokers will offer secure, traceable payment methods, like bank transfers or credit card payments.

Only Use Trusted Platforms: Stick to well-known and reputable insurance companies or brokers. Ontario has RIBO which licenses insurance brokers in the province and has an online search tool to check if a broker is licensed and active: Broker Search – Registered Insurance Brokers of Ontario (RIBO) – Ontario’s regulator of general insurance brokers

Report Suspicious Behavior: If you suspect you’ve been targeted by a Ghost Broker, report them to the appropriate authorities. For example, in Ontario, you can report it to RIBO, FSRA, or the police.

Consequences of Using a Ghost Broker

• Financial Loss: You could lose the money you paid for the policy and potentially face additional costs if you need to obtain legitimate insurance later.
• No Coverage: You could be left without any valid insurance, putting you at risk of major financial losses if you’re involved in an accident and/or have a claim.
• Legal Trouble: In some cases, you might be deemed uninsured by authorities, which can lead to fines, penalties, and potentially even licence suspension.

Always use a licensed insurance broker. By using a reputable insurance broker, whose identity and credentials can be easily verified, you will be properly insured and protected against the unexpected things that can happen in life.

Special thanks to our insurance company partner, Aviva Insurance, for the topic idea: Beware of Ghost Brokers selling fake insurance

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Staebler Insurance is a general insurance broker specializing in car insurance, home insurance, small business, and commercial insurance. Staebler brokers proudly serve Kitchener, Waterloo, Cambridge, Guelph, Stratford, Listowel, Fergus, Elora, Wellington County, Perth County, Waterloo Region and southern Ontario. Get a Quote to get started today.