Just like any other business, there are a few bad apples out there who can give the wrong impression about insurance brokers. They’ve earned a reputation of their own, and now have a name for themselves, too: ghost brokers.
What are ghost brokers?
Ghost brokers are fraudulent brokers who sell policies — that are either inaccurate or inactive — to unsuspecting customers. They usually operate their "business" in one of two ways:
They’ll set up an insurance policy using false information to offer an impossibly low premium.
They won’t set up an insurance policy at all, and will send forged insurance documents to the policyholder.
In addition to charging customers the full cost of their premium (which they’ll pocket), they’ll also charge a made-up fee to cover the costs of setting up a policy.
How do you know if you’re working with a ghost broker?
Ghost brokers often target newcomers to Canada — since they’re the most unfamiliar with the system, and therefore unlikely to identify unusual behaviour — though, anyone can be duped by these fraudulent brokers. Some drivers don’t realize that their policy is invalid until they go to make a claim, which can lead to a number of other problems.
Here are some signs to look out for if you suspect that you’re working with an unlicensed broker:
Your premium is unbelievably cheap
An impossibly low price is a major red flag you’ll want to look out for. You can compare the price they offer by getting quotes from other providers on your own.
They require a deposit
Licensed brokers will never ask for a deposit or surcharge you for setting up your policy. You’ll only need to pay for your monthly premium, so if you’re ever asked for additional payments or deposits, it’s a good indicator that you may be working with a ghost broker.
Ghost brokers may not have a physical office location. They may ask to meet in a public space, or offer to come to your home.