When does a little white lie turn into insurance fraud?
You are legally required to carry auto insurance in California. You may think that it’s a big expense for something you may or may not need one day. You may even be tempted to alter your auto insurance application so that you can save a few dollars every month on the premium. Even if it’s what you think is a small fib, giving false information to insurers can result in serious consequences.
Why might you lie to your car insurance company?
In order to determine a premium for a motorist, a car insurance company will ask a lot of questions. Questions include your address, date of birth, vehicle model year, occupation, and marital status. Some questions are a bit more complicated, such as upgrade packages on your vehicle, recent tickets or accidents, your annual mileage and distance you drive to work or school. All of this information builds up a picture for the insurer about how much financial risk you pose.
You might be tempted to put down your sister’s address if she lives in a quiet, safe community and you live in the city. If you pose less risk to the insurer, your premium will likely be lower. However, even these minor details can be seen as lying on your application.
What are the consequences of lying to your car insurance company?
Insurance fraud costs insurance companies billions of dollars every year, so you can be sure that they come down hard on violators. Generally, there are three main lines of defense auto insurers have against dishonest customers:
- Policy cancellation – Your policy will be suspended immediately and you will be left uncovered. This means you’ll need to find coverage fast, and policy cancellation will cause increases over standard premiums when you attempt to rewrite your policy.
- Claim denial – If you try to file a claim because of an accident or incident and your insurer finds out your lied on your application, they could refuse to pay your claim.
- Premium increases – Your insurer may increase your premium heavily to account for lost income from your incorrect application.
Finally, all fraud – including auto insurance fraud – has legal consequences in the U.S. If you’re caught in a fraudulent lie, you’ll not only be on the hook for any costs your insurer would have covered, you may be facing hefty fines, community service, probation, or even jail time.
Remember to fill out all insurance applications correctly. If you don’t understand a question, just ask for help. For reliable and affordable auto insurance coverage, contact the professionals at Lou Aggetta Insurance Services.