One of the first conditions of an auto insurance policy is the requirement to provide honest and accurate information and keep it up to date. Companies rely on details provided while getting quotes to determine eligibility or price. However, insurers carry out their checks as well and can verify most of the details essential to pricing right at the start. Also, they investigate most claims over certain amounts and dig deeper when they suspect something. So, the chance of a lie getting caught in some state is high.
Most common lies motorists tell to their vehicle insurers are about their driving records like accidents or traffic tickets, omitting high-risk drivers living with them, how many miles a year they drive, their permanent addresses and vehicle usage and all of these details can easily be checked and found out.
For example, automobile insurance companies check Motor Vehicle Records, which includes drivers’ DMV registered addresses, any traffic tickets they have on record, accidents and vehicular crimes they were involved in. Even if they lied about a ticket they had in another state recently, those tickets find their way back to the local DMV sooner or later.
Even if they provided a quote based on false information, auto insurers check driving history and credit score before they provide coverage and are likely to get the true picture. Then, they can adjust the quote accordingly and ask for more money or refuse to offer coverage.
At times, a moving violation citation may be new and doesn’t show on driving records yet. Companies can cancel a policy within 60 days of inception in most states if they discover the risks are higher than they initially thought.
If they don’t discover the lie the policyholder may be able to get away with lower car insurance premiums until there is a claim. For example, the existence of a teenage driver living with the policyholder may not be discovered unless it is investigated in case of a claim. This may sound that it may be worth trying your luck but what is the point of auto insurance coverage if a claim can be refused due to false or omitted information because companies can deny a claim once they find out a policy or a lower premium was obtained under false pretense.
An insurer either denies a claim and leaves it at that or informs the authorities of an insurance fraud, in which case policyholders can be charged with a misdemeanor or even felony depending on the state and severity of the incident. Both misdemeanor and felony are criminal charges that would go on people’s criminal records as well as driving records when they are traffic or insurance related.
There are several degrees to lying on auto insurance applications. For example, lying about yearly mileage is usually considered a soft fraud and most companies don’t take any further action after discovering, especially if it didn’t result in any meaningful discount.
Many companies don’t even rely on the mileage information provided and they either calculate the likely mileage based on their own models or calculate the premiums on average yearly mileage. If motorists are really traveling much less than the average, they may seek policies that offer discounts for low mileage. Such policies usually confirm the mileage with a telematic device, app or odometer reading.
Giving a different address other than the one you actually live in order to get lower vehicle insurance rates is a fraud and can have severe consequences like criminal charges. There are examples of it reported in the media.
Lying to a car insurance company about your driving history may not be worth the effort because companies are likely to find out about it sooner or later and can at least demand the payment of savings achieved. For example, if you lied about a traffic ticket and it came to light at the next renewal because the insurer checked your driving records, they would ask you to pay back the discounts they have given in the previous policy terms. They may also refuse to offer renewal in this example. But they are unlikely to take further action unless it was a DUI you didn’t tell them about.
Not only are motorists required to provide honest and accurate information when they are buying vehicle insurance but also they need to inform their insurers of any material changes as they happen. It is not easy to keep a lie because either it is likely to be found or people get caught on their own lies when they have a claim. So, people may not have much to gain in the end but they may lose a lot if their claim is refused because of a lie or they are charged with a crime.
The most serious insurance frauds usually happen during a claim and authorities take it seriously when someone tries to get paid a lot more than they lost by fraudulent insurance claims. Depending on the amount of money involved and clear intention or a mistake, people can be charged with felony due to false insurance claims. Once someone is charged with insurance fraud, not only do they go to jail but also have to pay back the money they got fraudulently and pay fines.