Like most times in life, when you lie you are only punished when you are caught. This is no different with lying on your car insurance application. Most people will lie about drivers living in their home, claim they have no accidents or tickets and state they have prior car insurance all in the name of getting a cheaper rate. Some of these people actually think they are smart but little do they know that insurance companies hire underwriters that pull reports based on your driving history. These reports show everything from claims history such as at-fault accidents to how many and what types of tickets you have. These reports can also be used to infer how many drivers are in the household.
How they Catch You
For example, if you are a 55 year old married male, it is likely you have a wife that drives and even more likely you have children that drive as well. The underwriter will need clarification from either you or your broker on how many drivers are in the household. In addition, your driving history known as an Autoplus report will not only show the prior insurance policies you have had but also show the names and driver’s licence numbers of any drivers on your prior policies and accidents they may have had. Thus, making it incredibly easy to discover any misrepresentations you may make.
What are the Consequences?
The consequences of lying to insurance company depends on when the lie is caught. If it is caught during the underwriting process which is when you send your application in for approval, you will either be asked to provide an explanation for the misrepresentation or be cancelled for failing to provide information. If however your lie is caught when you are involved in a claim, you may be cancelled for misrepresentation which would make it very difficult for you to find insurance elsewhere. You also may have your claim denied and could also be charged with insurance fraud.
I’ve Been Caught, What Should I Do?
It depends if they are cancelling you for misrepresentation or insurance fraud. If you are cancelled for insurance fraud you are pretty much screwed as no standard insurance company will insure you. You’ll have to find a broker who specializes in placing non-standard risks, which simply means bad drivers. Yes even though you lied on your application, you are now lumped in with all the bad drivers. Expect to pay as much as 50 to 100% on your car insurance.
The same is true with being cancelled for misrepresentation except you’ll have more options of which insurer you can go with. Don’t forget to tell your new insurance company what you’ve been cancelled for as they will ask you on the application. You absolutely positively do not want to lie again otherwise you can pretty much kiss your car goodbye.
It’s Not Worth It
Is it worth lying to your car insurance company? In the end, it’s probably not a good idea to lie to your insurance company as they have access to all types of sophisticated reports that can find out the truth about your driving history, claims, tickets and even credit score. You’ll also have to consider the financial burden and stress you’ll have to endure as a result of being caught.