When you’re applying for car insurance, you want to get the lowest rate you can. If you know much about how car insurance rates are calculated, you might be tempted to be untruthful about your situation to keep your rates low. Instead of admitting to driving 30 miles to and from work, you might decide to say it’s only 5 miles instead. You may even omit accidents or other negative things about your driving record, figuring that no one will find out.
Facts are important when it comes to car insurance. The process of getting car insurance involves information-gathering to determine the level of risk each driver (and car) on a policy represents. When you don’t admit to higher-risk behaviors like driving your vehicle for business prposes or claim that you took a defensive driving class when you didn’t, you will get a lower rate, at least initially.
Common Auto Insurance Falsifications
The most common lie on auto insurance policies is where applicants park their cars. While you may be tempted to use a friend or relative’s address in a lower ZIP code, when you’re involved in an accident it’s usually easy for an insurance company to learn where you really live.
Other common misinformation given on applications includes which drivers have access to the car and about a driver’s accident history. Driving history is almost always caught when the insurance company does a routine records check, and insurance companies also have ways of finding out who lives in your household and is likely to be driving a car linked to that address.
Using the vehicle for business purposes will make the rate jump significantly, but almost a fifth of drivers fail to disclose such use on their applications. Whether it’s for delivering pizzas or driving for Uber, insurance companies need to know that you are using the car for a job or business so that they can properly calculate the risk.
Applicants also lie about kids’ grades, their education level, and the amount of time they have been licensed. Each of these pieces of information could give you a small reduction on your car insurance bill, but if they are discovered, it may cost you more than you think is worth it.
The Importance of Being Truthful About Auto Insurance
Other important things to disclose on a car insurance application include whether your vehicle has a salvage title, whether you own a home, and what you do for a living. Different insurance companies have different risk algorithms, so your rate could vary widely between several companies that are using different algorithms. Getting several quotes before purchasing auto insurance is always a good idea.
The fact is, there are consequences to lying on your car insurance application that may make you think twice about being one of the estimated one-third of people who say that they have done so. Most people who lie to get a lower rate don’t think they will get caught, but a survey on Cars.com showed that 40% of those who lied were eventually caught in their lie and experienced one or more of the following consequences.
Consequences of Fraudulent Car Insurance Applications
One consequence of giving false information on an insurance application is that the insurance can be cancelled. If the lie is severe enough, the company may rescind you, which is basically declaring your policy was never in force at all.
Giving false information because you want to pay less money may seem like a good idea at the time, but if you are caught, it could mean loss of coverage for the entire term of the policy, leaving you liable for thousands of dollars in damages. For insurance to properly protect you, it must be based on accurate information.
If your insurance is terminated because false information was discovered, you may have difficulty obtaining replacement coverage, an may need to purchase higher priced insurance from a ‘non-standard’ carrier.
Another consequence of giving inaccurate information may be that the insurance company will retain you as a customer, but charge you at the higher rate, including charging you for previous coverage periods. You will get protection for any accidents or incidents that occur as long as you pay the higher rate that accurately reflects your risk.
Sometimes insurance companies will see a non-disclosure as accidental or unintended, which makes them more likely to retain you as a customer. You may still be charged a higher rate for previous and current premiums, but you are unlikely to be pursued for fraud or given other negative consequences.
Finally, if an untruth comes to light after claims have already been paid and resolved, you can be charged with insurance fraud, which is a crime. If convicted, you will pay steep fines and can even do jail time in some cases.
In all cases, the discovery of untrue information on your auto insurance application will lead to a high cost. Taking a chance that you can save some money now is likely to lead to paying much more later. Telling the truth on your application may cost a little more in the present moment, but can save you a great deal of time, money and trouble later.
Get an auto insurance quote from AIS to see how much you could save on your car insurance. Just be sure to give truthful information so that you will be protected properly and fairly.
The information in this article was obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.
