Avoiding insurance seller scams & finding a legitimate broker

Written by Stephanie Fereiro | Published on: March 26, 2019 | Updated: May 2025

💡 WAVE Tip: Double check your the legitimacy of your documents! Fraudsters may also use AI-generated or doctored documents — always verify any paperwork directly with the insurance company or a licensed broker.

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Protect Yourself from Insurance Seller Scams

With insurance fraud continuing to rise across Canada, it’s more important than ever to be informed. Fraudsters are constantly adapting their tactics — especially online — and knowing how to spot a scam can protect you from financial loss, denied claims, or even legal trouble.

One of the most common and damaging types of fraud today is the insurance seller scam, often run by individuals referred to as ghost brokers. These unauthorized sellers issue fake insurance policies to unsuspecting buyers. Victims often only discover the scam when it's too late — after an accident, during a police stop, or when trying to file a claim.

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 Policy?

Being scammed by a ghost broker can result in serious consequences:

• No Coverage in an Emergency: If you try to make a claim, the insurance company won’t have any record of your policy — because it doesn’t exist.

• Criminal Charges: You could be charged for driving without valid insurance, which may result in vehicle impoundment, a license suspension, fines, and even a criminal record.

• Higher Premiums in the Future: A lapse in coverage caused by unknowingly driving without insurance could lead to increased costs when you eventually secure a legitimate policy.

• Financial Loss: You'll have lost any premiums you paid to the fraudster — and you won’t get them back.

  
  

Red Flags: How to Spot a Scam

Watch out for these common signs that an "insurance broker" may not be legitimate:

• The premium seems suspiciously low compared to other quotes

• The insurance company name on your documents doesn’t match the insurer's official website

• The person asks you to pay in cash, via e-transfer to a personal account, or through cryptocurrency

• They charge a fee just to give you a quote

• There's no digital trail: no website, no legitimate company email address, or only vague contact details like a P.O. box

How to Buy Insurance Safely

To make sure you’re buying a real policy from a licensed seller, follow these best practices:

• Ask for referrals from people you trust, like friends or family

• Verify credentials through your provincial insurance regulator or broker association

• Use the Insurance Brokers Association of Canada (IBAC) broker directory: https://www.ibac.ca

• Check the insurance company’s official website to confirm the broker is authorized to sell on their behalf

• Read reviews and verify contact details before proceeding with any quote

Shopping for Insurance Right Now?

WAVE'S 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.

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Have more questions? Contact us today! Toll Free: 1-855-809-5166 Email: hello@waveins.ca

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