The main purpose of insurance is to protect you in the event of an accident — whether or not you are responsible — in exchange for a premium charged by the insurance company. Your insurance company determines how much you’ll pay for insurance by assessing the answers you disclose on your auto or home application.
When applying for an insurance policy, you’re in a unique position, since you have full knowledge of all the necessary facts needed by the insurer. What you say will determine if the company will offer you a policy, including the correct premium to charge you in relation to the risk you pose.
If your insurance company discovers you purposely hid material facts on your auto or home application, you can expect to face consequences, such as:
Failing to disclose or hiding material facts on your application is considered “misrepresentation” or “non-disclosure.” If the insurance company determines the insured individual did not disclose material facts, the insurance company may void the insurance contract. In other words, the policy will be cancelled from its inception.
Non-disclosure cancellations stay on your record for three years, which means you no longer qualify to purchase insurance through the regular market. Your only course of action would be to purchase insurance through “high-risk” insurance carriers, which means higher insurance premiums.
If you’ve reported a claim to your insurance company and, through investigation, the company discovers you willfully concealed material facts that would have influenced the insurer’s decision to issue a policy, then your claim will be denied and your policy voided.
When an innocent non-disclosure of facts occurs, a policy will not necessarily be voided. Examples of true non-disclosures from policy applicants include such examples as failing to mention that a person uses their vehicle to deliver pizzas, concealing the fact that a person uses their vehicle as a full-fledged taxi, a person neglects to inform an insurer that they run a welding business in their home or that they run a full-time daycare five days a week.
The lesson? Always provide the most accurate, up-to-date material facts when completing an application to an insurance company. By being truthful, you’ll prevent potential consequences and even the voiding of your policy. If you’re concerned about getting the lowest rate possible, visit InsuranceHotline.com instead - you’ll get quotes for the lowest rate possible from over 30 competing insurance companies instantly and for free.
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