Lethbridge, Alberta -- A number of factors are driving up auto body repair costs in Canada. One is the increased use of advanced driver assistance systems. Another is fraud.
According to Aviva, auto body insurance fraud is estimated to cost Canadians about $2 billion per year, and this is driving up auto body repair costs across Canada.
Traditionally, it hasn’t been easy for insurers to determine which costs are legitimate and which are fraudulent. To get around this, many insurance companies are adopting new tools and strategies.
Inexpensive and difficult-to-detect hidden cameras are making it easier for insurance companies to conduct sting operations on collision repair facilities. The results of these activities often paint the collision industry as a whole in a negative light.
In a 2018 investigation conducted in Ontario by Aviva, 10 cars were purchased and equipped with hidden cameras. The vehicles were then deliberately crashed or damaged and placed at random locations on a highway with actor owners.
According to the insurer, it found there was evidence of fraud involving repairs to nine out of the 10 tested vehicles, and that most of the involved auto shops wrongfully billed and racked up costs through a variety of fraudulent means. Severe penalties resulted.
More recently, the Insurance Corporation of British Columbia, commenced an investigation into the billing practices of an auto body defendant, which revealed evidence of fraud in 65 cases. This represented over 40 percent of the files that it reviewed. Of the 42 vehicles, investigators inspected and identified fraud issues with 25 of them.
Sometimes it can be tempting to get back at insurance companies for perceived slights -- but taking the instinct to take justice into ones own hands can get businesses into a lot of trouble.
As a lawyer who has spent the past 18 years helping Canadians, including a number of auto body repair technicians, honestly navigate challenging insurance systems, my advice is pretty simple: do the things that your grandparents, parents, children and grandchildren would be proud of.
Here is a list of the seven mistakes likely to catch the unwanted attention of insurance fraud departments:
- Claiming to use new parts when aftermarket or recycled OEM parts were used
- Deliberately damaging vehicles in order to meet an insurance requirement
- Hiding incomplete repairs under plastic shields
- Claiming for repairs that weren’t actually completed.
- Entering into a kickback arrangement with an appraiser or an insurance company, without disclosure and consent of the customer
- Taking advantage of an uneducated appraiser
- Padding invoices or time sheets, especially in retaliation to labour rate caps
The Royal Canadian Mounted Police investigates fraud, including auto body repair, and you can report fraud to the RCMP by calling the Canadian Anti-Fraud Centre at 1-888-495-8501.
You can also report fraud by emailing [email protected]
About the authors:
Travis Bissett (left) is a partner at Stringam LLP and a leading Alberta lawyer with 18 years’ experience representing victims of serious and fatal motor vehicle accidents. Recognized by Best Lawyers and consistently top-rated by clients, he serves as special counsel on personal injury matters, holds leadership roles with the Alberta Civil Trial Lawyers Association and the Canadian Bar Association, and is a contributing author to key legal manuals used across the province.
Terrance Kutney (right) is a civil litigation and general practice lawyer at Stringam LLP with a background in political science, economics, and cross-cultural communication. Fluent in Japanese after years living and working in Japan, he brings a global perspective to his practice, which spans family, employment, corporate law, and wills and estates.
