Auto insurers lose at least $29 billion each year on insurance fraud. Most people give incorrect information with hopes of paying lower premiums. Others hope to make money by submitting claims of accidents that never happened.
Giving inaccurate information when applying for insurance is a form of fraud. Below are some of the repercussions of lying to an insurance company.
Your Insurance Company May Cancel Your Policy
Providing incorrect information can lead to the cancellation of your policy.
One common reason for cancellation is providing the wrong address. Generally, auto insurance is more expensive in some states than in others. People living in areas where insurance is expensive might claim they live in other states where insurance is cheaper to try and save money.
Remember that losing your coverage due to non-disclosure puts you in the high-risk category. Policyholders in this category pay more for their auto insurance regardless of what state they're in.
Your Insurer May Deny Your Claim
Lying to your insurer may push them to deny your claim when you need it the most. For instance, a car used every day has a higher chance of getting into an accident. As a result, insurance companies charge more to insure such vehicles. This could tempt people to lie about their driving habits to try and get discounts that they don't qualify for.
Do not lie to your insurer about your daily driving habits. If you get into an accident, your lie might push your insurer to deny your claim.
When applying for insurance, ensure you state the correct age of each driver in your household. Typically, teenage drivers are required to pay more than older drivers. For this reason, most parents lie about the age of drivers in their households. Some even fail to state that the insured car owner is a teenager.
But if an accident occurs, you might have difficulty getting compensation if the driver is younger than you'd let on.
You May Start Paying Higher Premiums
Insurance companies determine your premiums based on the information you provide. Your driving record also determines how much you'll pay as premiums. If you've been involved in a few accidents, you'll have to pay higher premiums than someone with a clean record.
Some people try to avoid such high payments by lying about their driving records. If your insurance company discovers you withheld such information, they could increase your premiums.
Providing incorrect information may save you a few bucks for a short time. But, once the truth comes out, you'll lose more than you tried to save. So, ensure that you provide accurate information when purchasing auto insurance.