The implications of lying on a car insurance form include cancellation of your insurance, fines, and even jail.
According to one survey, car insurance is undoubtedly expensive, and over two-thirds of drivers who provide incorrect information to insurers do so to save money. The Consumer Federation of America (CSA) says that the average cost of vehicle insurance in 2015 was $889, a 61% increase from 1989 when the average cost was $552. The average state gain throughout that period was 75%. In 2017, the average price increased to $1,004.68, with some jurisdictions charging well over $1,000 per year. According to a U.S. News & World Report survey, the average cost of vehicle insurance would be $1,416 by 2020.
Rates are determined by a variety of criteria other than a person’s driving record. People are frequently required to disclose their credit history, the typical number of miles they travel, and the year, company, and vehicle model. The purpose of supplying false information—to make oneself appear to be a better driver and one’s car appear to be a lower risk—may be appealing to cut insurance prices. However, it comes with its own set of risks: being discovered.
- Motorists may attempt to conceal traffic tickets, accidents, and other incidents that could result in higher insurance rates.
- Insurance companies frequently discover the truth when an insured person files a claim.
- The consequences of being discovered may include being charged a higher premium, losing your insurance policy, or facing civil fraud penalties.
How Errors Occur
Not all errors on a vehicle insurance form are deliberate. You may not recall, for example, how many miles you drove your automobile the previous year and must make an educated guess. However, whether your errors are intentional or not, if you have to file a claim—say, for an accident—the insurance company will almost certainly find out. Claims investigators make an effort to confirm the accuracy of the application. The risk is that they can cancel your insurance and you will face civil fraud fines. At the very least, your insurance premium will rise.
On the surface, the chances of your car breaking down appear low. In 2017, there were around 6.45 million collisions in the United States, and the country had 221.71 million licensed drivers. That indicates that a driver has a 3% risk of being involved in an accident every year. In addition, someone can steal or vandalize your car. The question is whether you want to rely on luck year after year.
Here are some typical omissions and untruths that can result in policy cancellation, difficulty to obtain new coverage, fines, a legal way to pay the premiums back, or even jail.
Accidents or citations
Regardless of where you are living, this is the easiest thing for insurers to check on. When you moved to New Jersey, the fender bender you had on the West Coast did not vanish from databases. Although that speeding ticket may feel like a distant memory, your insurance company is unlikely to sympathize.
The primary driver
Typically, this involves a dad claiming to be the primary user of the insured vehicle while it is his college-going son. Young guys have higher premiums because they are more likely to involve in accidents and pose more significant risks.
The amount of time you spend driving
The longer an automobile is on the road, the more likely it may be in an accident. Frequently, a driver will say that their daily trip is shorter than in reality. When you smash up the car far away from home, it can be more challenging to explain what happened.
How did you drive
Assume you use your automobile for business, such as delivering pizzas or transporting tools for house repairs. However, you inform the insurer that the vehicle is only used for shopping and amusement. When you get into a car accident on the interstate, and the police report mentions hundreds of pizza pies splattered all over the car’s interior, it doesn’t look good to the insurance company reviewing your claim.
Where you live
If you live in a high-crime region or a large metropolis, you may have to list your sister’s address as your own. According to statistics, she lives in a quiet neighborhood where there is less risk of cars theft or damage. That untruth is quite simple to debunk.
Lying to an auto insurance company may appear harmless, and the result in decreased premiums may make the lie seem justified. However, there are better ways to keep your premiums low, such as consolidating your auto and house insurance plans with the same provider or raising your deductibles.