Why You Should Never Lie on Your Auto Insurance Application

The consequences of fraud can be tremendous. This is why you should never on your auto insurance application. If you lie on your auto insurance application, you'll face a more difficult claims process or even your policy being declared void. Sometimes the consequences of lying on an auto insurance application even include the auto insurance provider taking you to court, resulting in jail time.

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Rachel Bodine graduated from college with a BA in English. She works as an associate editor and writer for 4autoinsurancequote.com for over a year and enjoys creating content that offers expert advice on car insurance topics.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs...

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Reviewed byLeslie Kasperowicz
Former Farmers Insurance CSRhttps://res.cloudinary.com/quotellc/image/upload/insurance-site-images/4autoins-live/6ea5d860-leslie-kasperowicz.jpg

UPDATED: Sep 8, 2020

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What You Should Know

  • Lying on an auto insurance application is a form of fraud and carries multiple penalties if caught
  • If you lie on your auto insurance application and your insurer finds out you lied, your claim may be denied or your policy dropped
  • To avoid accidentally committing fraud, make sure you update your policy information after a change of address, vehicle, or accident

The consequence of lying on your car insurance company can be jail time–one of the many reasons why you should never lie on your auto insurance application.

What happens if you lie on your car insurance application? Applying for auto insurance is a stressful process if you are struggling with understanding auto insurance. It often results in paying a higher monthly premium than you originally expected. In an attempt to lower this premium, roughly half of applications fudge the truth, according to Investopedia.

Auto insurance application lies range from the seemingly inconsequential fibs to majorly deceptive lies. Although there are other reasons behind these untruths, the vast majority boils down to an attempt to save money (there’s no denying auto insurance can be expensive). But lying on your auto insurance application is never worth it.

Read on to find out what happens if you lie on car insurance applications. If you want to save money honestly without lying on your insurance application, use our free rate comparison tool to find the cheapest rates in your area.

Why Drivers Lie on Auto Insurance Applications

There are a lot of factors that affect not only your auto insurance premiums but also your auto insurance eligibility. Most people are aware of at least some of these factors. For example, receiving traffic violations and getting a DUI.

Because both of these things factor into an auto insurance company’s decision-making process and more often than not result in higher premiums, a lot of people are tempted to fudge the truth.

In fact, by far the most common reason to lie on an auto insurance application is to receive lower premiums. Even small lies, such as where you will park the vehicle, can result in lower costs on your monthly premiums.

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Most Common Lies on Auto Insurance Applications

DMV.org states that you’d be surprised at just how many different types of lies people tell on their auto insurance applications. However, the organization goes on to say that there are a few main lies that people seem to think they’ll get away with when lying on insurance.

The most common auto insurance lies when drivers apply for auto insurance include:

#1 – Lies About Accidents and Tickets

By far the most common lie is failing to reveal the exact number of accidents you’ve been in and tickets you’ve received. Most drivers do this because rates increase hundreds or thousands of dollars after an accident. To show you what we are talking about, take a look a the table below.

Average Annual Auto Insurance Rates Based on Driving Record
CompaniesAverage Rates with a Clean Driving RecordAverage Rates with One AccidentAverage Rates with One DUIAverage Rates with One Speeding Ticket
USAA$1,933.68$2,516.24$3,506.03$2,193.25
Geico$2,145.96$3,192.77$4,875.87$2,645.43
State Farm$2,821.18$3,396.01$3,636.80$3,186.01
American Family$2,693.61$3,722.75$4,330.24$3,025.74
Nationwide$2,746.18$3,396.95$4,543.20$3,113.68
Progressive$3,393.09$4,777.04$3,969.65$4,002.28
Farmers$3,460.60$4,518.73$4,718.75$4,079.01
Travelers$3,447.69$4,289.74$5,741.40$4,260.80
Allstate$3,819.90$4,987.68$6,260.73$4,483.51
Liberty Mutual$4,774.30$6,204.78$7,613.48$5,701.26
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Unfortunately, lying about a car accident to insurance is also among the easiest lies for an auto insurance company to detect. These things are easy for providers to look up – and they will double-check them.

#2 – Lies About Where You Live

Auto insurance rates can fluctuate depending on where you live, especially if it’s a high crime area. You might be tempted to use a relative’s address to get lower rates. This lie is, like most, easy to disprove if the car is ever stolen, vandalized, or otherwise damaged.

#3 – Lies About Who Drives the Vehicle

Many families have a vehicle that is driven by more than one person. But it’s important to list the main driver’s name on the application. For instance, many parents list themselves as the primary driver of a vehicle that in reality is driven almost solely by a child to receive lower premiums.

#4 – Lies About Driving Habits

Auto insurance providers look at your driving habits to give a premium. Chief among these is how many miles you spend on the road. A lot of people underestimate how much time they spend on the road in an attempt to lower their auto insurance rates.

#5 – Lies About Parking Habits

This might seem the most inconsequential of all, but it’s important not to lie about where you park your car. Many people lie by claiming they park their car inside a garage at night when in reality they park it on the street. If the vehicle is ever vandalized while parked outside at night, then your claim will be more difficult to seek.

Consequences of Lie on Your Auto Insurance Application

Is it illegal to lie to an insurance company? Yes, it is illegal to lie about your situation to get better rates. Insurers take cases of fraud seriously, as according to the Insurance Information Institute (III), fraud costs the insurance industry an average of $40 billion per year. This means each U.S. family has to pay about $400 to $700 in higher premiums to make up for insurers’ lost earnings from fraud.

What happens if you lie on your car insurance? The consequences of lying on your auto insurance application vary greatly. But the most common consequences of lying to an insurance company are a more difficult claims process or even the policy being declared void.

Lying on an auto insurance application is an act of misrepresentation or nondisclosure. What is car insurance misrepresentation? It’s any time you answer dishonestly.

If your policy is canceled because you fudged the truth on your application, you are now liable for any compensation required by the filed claim. Even a small lie, like where you park your car at night, can result in your policy being canceled.

It might seem like you can play the odds and get away with a small lie, and this might even be true, but it’s far better to play it safe just in case. You don’t want to get stuck without valid auto insurance if you’re in a car accident where a claim is filed.

And that’s not all – you’re at a major risk for being fined by the auto insurance company if you lie on your application. Sometimes the consequences even include the auto insurance provider taking you to court, which could result in jail time.

Alternative Ways to Lower Auto Insurance Premiums

To avoid being one of the cautionary tales that start with “I lied to my car insurance company,” there are a few ways to lower your auto insurance premiums rather than lying on your application. The most common is trimming down your coverage. Many auto insurance policies are offered with far more services than the typical driver needs.

Trim off the services that you feel comfortable without getting a better monthly rate on your auto insurance. Of course, you need to make sure that you don’t do away with any services that you actually need to stay fully protected.

Another option is to start shopping around to find budget auto insurance. See if there’s a competing auto insurance provider that will offer you a better rate for the same type of coverage.

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Other Auto Insurance Application Mistakes

Lying, whether it’s not reporting all of a vehicle’s drivers or not mentioning your driving infractions, is the biggest auto insurance application mistake. But there are plenty of others that people make regularly.

Perhaps the second biggest mistake is failing to update your policy information. It’s necessary to report any significant changes to your provider as soon as they’re made.

For example, you must report any new drivers, a job that extends your commute, minor accidents, and more. Not only do these updates protect you in the event of an accident, but they can sometimes even save you money on your premiums.

There’s no good reason ever to lie or stretch the truth on your auto insurance application. Although it might seem harmless and easy to get away with, lying to insurance company consequences are severe. Most commonly, your policy might get canceled when you need it the most.

So, be completely honest and look for other ways to lower your premiums that don’t require lying to your auto insurance provider. If you want to start saving on your auto insurance today without lying on your auto insurance application, enter your ZIP code in our free tool below.

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