by Timothy Montales
Faking on your auto insurance application can be an expensive mistake - yet one in 10 Americans have purposely provided the wrong information when applying for an auto insurance policy just to secure a better rate, it has been reported by NerdWallet. Mileage, driver, and parking locations are some of the common areas in which lies are being made.
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“People may not even see this as a type of fraud, but it is because you are misrepresenting the risk you are to the insurer,” Amy Danies, insurance expert, NerdWallet, told CNBC.
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The lies will likely catch up with you.
“Underwriting auto insurance is becoming a lot more data-driven. It’s much easier to catch these things than it was before,” Peter Kochenburger, deputy director – Insurance Law Center, University of Connecticut stated.
Insurers consider many factors when determining a client’s risk, he added, and they are likely to check the details you provide versus those they have access to in their own databases and third-party reports such as C.L.U.E., which archives recent auto claims. Misrepresentations are even more likely to manifest amid insurer investigations if a client has to file a claim.
State laws vary but, generally, a lie that is material to a claim allows the insurer to deny or limit the claim coverage – leaving clients on the hook for that damage, Kochenburger cautioned. The insurer can cancel a policy, and the lie could even run afoul of state insurance fraud laws.
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