Your Personal Finances

Consumer Alert

As the old saying goes, there is a sucker born every day. Here's a new scam targeting naïve Canadian drivers. The Financial Services Commission of Ontario says an increasingly common scam involves the sale of “cheap” auto insurance to unsuspecting consumers.

Here's how the scams work:

Bogus insurance agent

A person pretends to be a licensed auto insurance agent or broker and offers to arrange coverage at a much lower rate than you are currently paying or have been quoted. After getting information about your driving history and, a fee of course, he impersonates you when calling an insurance company for a quote. But he lies about your history to get a lower rate. You pay the company directly for the coverage, but your insurance is actually invalid because the information provided is false. FSCO also points out that licensed insurance agents do not charge you fees, they receive payment from the insurance company.

False advertising

An advertisement promises auto coverage at lower rates or free coverage for a certain period of time. When you call the phone number provided and you accept the quote they give you, you are asked to send partial or even full payment through a transfer or money wiring service. Unfortunately in this case, the auto insurance is non-existent and the person you dealt with is not a licenced insurance agent.

FSCO provides some valuable tips on how to protect yourself when it comes to finding auto insurance coverage:

• Do not pay a referral fee. Licenced agents are not allowed to charge you fees.
• Do not pay through a money transfer or wiring service.
• You or your agent must complete an application form for insurance. If your agent does it for you, check to ensure he is being truthful on it.
• Check to ensure your agent is licenced. In Ontario you can go to www.fsco.gov.on or www.ribo.com to check
• Check with FSCO that the insurance company is licenced.

If you are looking for a good free source for insurance quotes try www.insurancehotline.com or www.kanetix.ca. As with any financial decision, be sure to consult with your financial advisor before you make any purchase.

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