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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Jimmy McMillan
Licensed Insurance Agent
Jimmy McMillan is an entrepreneur and the founder of HeartLifeInsurance.com, an independent insurance brokerage. His company specializes in insurance for people with heart problems. He knows personally how difficult it is to secure health and life insurance after a heart attack. Jimmy is a licensed insurance agent from coast to coast who has been featured on ValientCEO and the podcast Modern Li...
Licensed Insurance Agent
UPDATED: Sep 21, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Sep 21, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- 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.
Read more:
- What if you lie about where you live to your auto insurance company?
- Why You Should Never Use a Fake Insurance Card
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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 RecordInsurance Companies | Average Annual Rates with a Clean Driving Record | Average Annual Rates with One Accident | Average Annual Rates with One DUI | Average Annual Rates with One Speeding Ticket |
---|---|---|---|---|
$1,933.68 | $2,516.24 | $3,506.03 | $2,193.25 | |
$2,145.96 | $3,192.77 | $4,875.87 | $2,645.43 | |
$2,821.18 | $3,396.01 | $3,636.80 | $3,186.01 | |
$2,693.61 | $3,722.75 | $4,330.24 | $3,025.74 | |
$2,746.18 | $3,396.95 | $4,543.20 | $3,113.68 | |
$3,393.09 | $4,777.04 | $3,969.65 | $4,002.28 | |
$3,460.60 | $4,518.73 | $4,718.75 | $4,079.01 | |
$3,447.69 | $4,289.74 | $5,741.40 | $4,260.80 | |
$3,819.90 | $4,987.68 | $6,260.73 | $4,483.51 | |
$4,774.30 | $6,204.78 | $7,613.48 | $5,701.26 |
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.
Read more: What is an auto insurance claim?
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.
Frequently Asked Questions
What are the consequences of lying on your auto insurance application?
Lying on your auto insurance application can result in a more difficult claims process, policy cancellation, and even legal consequences such as the insurance provider taking you to court, which could lead to jail time.
Why do people lie on their auto insurance applications?
People may lie on their auto insurance applications to try to lower their premiums. Common lies include not disclosing accidents or tickets, providing false information about where they live, who drives the vehicle, their driving habits, or their parking habits.
Is it illegal to lie on your auto insurance application?
Yes, it is illegal to lie on your auto insurance application. Insurers take cases of fraud seriously, and lying on an application is considered misrepresentation or nondisclosure. Fraud costs the insurance industry billions of dollars each year, resulting in higher premiums for everyone.
Can lying on your auto insurance application lead to policy cancellation?
Yes, lying on your auto insurance application can lead to policy cancellation. If your policy is canceled due to misrepresentation, you become liable for any compensation required by filed claims. Even a small lie, such as misrepresenting where you park your car at night, can result in policy cancellation.
Are there alternative ways to lower auto insurance premiums without lying?
Yes, there are alternative ways to lower auto insurance premiums without lying. You can consider trimming down your coverage to eliminate unnecessary services or shop around to find a competing auto insurance provider that offers better rates for the same coverage. It’s important to be honest and explore legitimate ways to save money on your auto insurance.
Compare over 200 auto insurance companies at once!
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Jimmy McMillan
Licensed Insurance Agent
Jimmy McMillan is an entrepreneur and the founder of HeartLifeInsurance.com, an independent insurance brokerage. His company specializes in insurance for people with heart problems. He knows personally how difficult it is to secure health and life insurance after a heart attack. Jimmy is a licensed insurance agent from coast to coast who has been featured on ValientCEO and the podcast Modern Li...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.