Dishonesty when applying for auto insurance never pays—in fact, they could even cost you a lot more, as one article on CNBC’s website details.
According to a survey of 3,000 consumers by insurance marketplace CoverHound.com, 51% of auto insurance applicants tend to misrepresent the information they share to their insurers. Both men and women were found to be equally likely to provide incorrect information, the survey discovered. The study also found that Millennials were more likely to be dishonest with their records than Baby Boomers or Gen Xers.
CoverHound.com chief executive Keith Moore interpreted the data, saying that some applicants are trying to get around insurance issues by purposefully omitting certain details, such as recent tickets or accidents.
Moore also noted that some of the other cases of misrepresentation are caused by inaccuracies on part of the consumer. Some applicants, he said, are not too familiar with how many miles they drive on average per year, or cannot remember when they last got a speeding ticket, for instance. Failing to double-check an application before it is submitted also contributed to insurance inaccuracies, Moore said.
Incorrect information can get customers in hot water, especially when insurers eventually come across the misrepresentations.
During application processing, insurers make sure to check the information a customer provided against those stored in a centralized database of claims and applications. Should a discrepancy be detected during the cross-referencing, insurers would—at the very least—either adjust the policy for higher rates, or could deny the application.
For those cases when a customer deliberately lied to get better rates, things get much worse.
"That's fraud," said Insurance Information Institute vice president Loretta Worters.
Legal action may be taken should an insurer suspect a consumer of fraud, with the consequences varying by state, type of insurance, and the scope of the supposed fraud.
Even those applications with misrepresented information that manage to get approved may not be clear out of the woods yet. Misrepresented information can get a consumer’s policy voided if it ever became relevant to a claim, i.e. existing damage.
