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.
The truth is that withholding information from your insurance company or providing false information is a poor idea. It's fraud. And it will not have good results. If you haven't been honest with your insurance company about basic facts, it needs to know in order to issue you the right policy at the right premium. If you lie, you'll face serious consequences when the truth comes out, including:
1. Your insurance policy could be cancelled
If your policy is cancelled, 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
Insurance companies provide policies and charge premiums based on the information you provide. If you drive a lot or have had accidents in the past, they believe this increases your risk of a future accident. If you didn't disclose problems in the past and the company learns of them, 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 with them, whether it's because of a claim you make or other means, it can have a more significant effect on your premium than if you told the company from the beginning that you've had an accident or tickets.
The insurance provider is within its rights to deny your car insurance in the future.
5. You could face fines and penalties
You may have to pay money to your insurance company or receive a fine under your province's insurance regulations. The amounts vary, but if a claim was paid under fraudulent circumstances, you could be held financially responsible for it. An insurance company can sue you to recover costs and damages under the law.
6. You could face criminal penalties
A false insurance claim can lead to jail, substantial fines, and a permanent criminal record.
Lying to your insurance company could seem like a good idea at the time, but in reality, it's a form of insurance fraud. 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 otherwise pay. Car insurance fraud costs Canadian taxpayers more than $1 billion a year, and it could be higher according to some industry estimates.
There's a better way to save money on auto insurance premiums than lying to the insurance company: use InsuranceHotline.com to find your best rate.
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