So you’ve bought a new car and can’t wait to take the bad boy for a spin. Not so fast! Before you hit the road cruising in your new car, it is a mandate by law to insure it.
Buying auto insurance can be an expensive affair, and people are always looking for ways to minimize the insurance premiums.
Lying or misrepresentation of facts on the auto insurance application is a common practice to lower the premiums. More than 50% of drivers in the US lie while signing up for car insurance.
Before we talk about the consequences of lying on the auto insurance application, one must understand that the reason behind this practice is to save a few hundred bucks every year on the auto insurance premium.
Here are some of the common lies that people resort to in their application:
- Lying about the number of miles driven every year – Showing that you use your car on rare occasions when you drive around the car for the most part of the day.
- Hiding any traffic tickets or at-fault accidents – concealing traffic violations, speeding tickets, minor mishaps, etc.
- Lying where you park the car – claiming you park the car in the garage when you actually park it on the street.
- Misrepresenting driver information – Parents claim to be the primary driver of the car that’s mostly used by their children.
- Concealing the use of the car – Failing to disclose that you offer cab service or deliver food in your car.
While it might seem alright to hide information from your insurance provider to save some money on car insurance premiums, one mishap is all it takes to unearth all the lies.
When you submit a claim, there is a high probability for the insurance company to stumble upon undisclosed information, and that could lead to some serious consequences.
Here are 5 risks of the lying on your auto insurance application:
Rejection of claims
Imagine this. You lied to your insurance provider about using winter tires. All seems hunky-dory till you meet with an accident on a snowy evening.
You submit a claim, and upon investigation, the insurance company finds out that you lied to them about using winter tires. In this case, you can say goodbye to your claims as the insurance provider will reject it for misrepresenting information.
The most common consequence of lying on an insurance application is the rejection of claims. And once the claim is denied, you would have to pay the entire expense for damages from your own pocket.
Cancellation of insurance
Once the investigators prove that you were hiding information on your car insurance application, your insurance provider may go one step further than just denying your claims.
Depending upon the level of misrepresentation of information, the insurance company can even cancel your auto insurance policy. The insurance provider might even reject your application for all kinds of insurance such as home insurance, health insurance, etc.
Highly expensive premium
If you concealed information such as the number of miles the car is driven every year or minor traffic violations, your insurance provider might not go to the extent of canceling the policy but might hike the car insurance premium.
Thus, lying is highly counter-productive as it will make your premiums highly expensive in an attempt to lower the premiums.
Insurance fraud can land you in prison
Lying to your insurance provider can land you deep trouble that is much bigger than policy cancellation and paying higher premiums. If you conceal critical information while signing for an auto insurance policy, the insurance company can even sue you for indulging in insurance fraud.
Committing insurance fraud is a criminal offense that could lead to paying hefty fines, digging a hole through your finances. It can even land you in jail.
Blackmark against your license
Another major risk of lying on your auto insurance application is being blackmarked as a risky/fraudulent purchaser. When you hide information with an intent to dupe the insurance provider, your license would be blackmarked.
This could lead to many reputed insurance companies rejecting your insurance application and thus making the process of finding a new insurance provider a painstaking affair.
If these consequences don’t deter you from lying on your auto insurance application, feel free to read the multiple cautionary tales about insurance fraud on the internet.
The repercussions of misleading your insurance provider are far greater than the perks of saving a few hundred dollars every year on car insurance premiums.