6 consequences of lying to your car insurance company
This article has been updated from a previous version.
Sometimes people think it's acceptable to withhold facts or give incorrect information to their insurance company. Often, the motive is simply to save money. Other times, consumers may think they've paid high premiums in the past and haven't made any claims, so the insurance company owes them something.
Withholding information from your insurance company or providing false information is a poor idea. It's fraud, plain and simple, and it will not have good results. In order for an insurance company to issue the right policy at the right premium, you need to be honest about your lifestyle and driving habits. If you haven't been honest about your situation, you can face serious consequences like:
1. Your insurance policy could be cancelled
If your policy is cancelled due to misrepresentation or non-disclosure, you'll likely have to pay more to get a new policy elsewhere. Policy cancellation for non-disclosure puts you in a high-risk category. Being in a high-risk insurance category automatically makes it harder and more expensive for you to get car insurance.
2. Your claim will be denied
Let's say you tell your insurance company that you don't drive your car to work every day, but you really have a 50-kilometre commute each way. If you get into a collision during your commute, the company may deny your claim because you didn't tell them the truth about your daily driving habits.
3. Your insurance premium will go up
Premiums are charged based on the information you provide. If you drive a lot or have had one too many collisions in the past, insurance providers see this as an increased risk of a future collision. If you didn't disclose a poor driving history and the company learns about it, your premium will go up because the company will have a more accurate picture of your potential risk.
4. You could be denied car insurance in the future
When your insurance company learns that you’ve been dishonest — whether about a claim you’ve made or something else — it can have a more significant effect than you think. The insurance provider is within its rights to deny you car insurance in the future. It’s advisable to let your insurance company know, right from the beginning, that you’ve had an accident or traffic tickets in the past.
5. You could face fines and penalties
If your insurance company pays out a fraudulent claim, you may receive a fine under your province’s insurance regulations. The amounts vary, but you will be held responsible. The insurance company can also sue you to recover costs and damages.
6. You could face criminal penalties
Making a false insurance claim can lead to jail time, substantial fines, and a permanent criminal record. According to the Insurance Institute of Canada, customers pay 5% to 15% more for their auto insurance premiums because of insurance fraud than they would pay otherwise. The Insurance Bureau of Canada estimates that insurance fraud costs Ontario drivers up to $236 per policy, per year.
As per industry estimates, car insurance fraud costs Canadian taxpayers more than $1 billion a year.
There's a better way to save money on auto insurance than lying to the insurance company: compare car insurance rates on InsuranceHotline.com.
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