Little insurance lies with big consequences

When disaster strikes but insurance denies paying the claim, financial hell breaks loose. It’s often caused by misleading information on the original application for coverage.

Insurance companies ask a lot of questions in order to provide a quote for your auto or home policy. With insurance premiums always on the rise, some policy buyers are trying to save money by “hiding” some “details” and simply lying on the application. 

In the best-case scenario, the premium will be adjusted when the company verifies the facts and corrects the application for you. But there may be the most severe case when the insurance provider denies paying the claim entirely after the accident. With high claims, companies will conduct a thought investigation, which may reveal all the fibs on the application.

A lot of information is readily available to insurance companies. They no longer need to ask you about your driving record, fico score, or prior coverage with no lapses. You won’t hide a speeding ticket or policy cancellation for non-payment. Still, many other details are left unverified. Here are the most common auto application lies that I came across in my everyday work.

1. Not disclosing all drivers living in the household. Adding a newly licensed person may be expensive; however, all drivers living with you should be covered, unless they have their own insurance. This rule applies to those who never use your car or have a temporarily suspended license.
2. Not revealing who drives your car on a regular basis. Allowing someone else to use your vehicle regularly may backfire after the accident if insurance can prove you’re not the primary user.
3. Adding somebody’s vehicle to your policy. Some people want to help friends whose insurance is too expensive, but the auto policy may cover only the cars registered to the policy owner. You can not add your child’s, neighbor’s, or any family member’s car to your policy. 
4. Providing wrong garaging address. When it comes to the premium – zip code matters! Don’t mislead insurance, sooner or later they will discover the truth.
5. How many miles you drive. Drivers who drive less, usually pay less, so it’s tempting to say you make just a few miles a day. After the crash, the company will definitely check the odometer.
6. Applying false insurance discount. Whether you have a defensive driving course or are a member of a motor club, you may be entitled to a discount. Remember, the company may ask for proof.
7. Hiding your real marital status. People frequently lie they are married to get a better rate or pretend they are divorced so that the spouse with a bad record is not included in the policy.
8. How you use your vehicle. A personal policy may be less expensive for a pickup truck, but if used for business, your claim payout is at risk if the insurer finds the truth.

When it comes to the homeowners’ policy, the list of little fibs is also long. People try to hide their trampolines, restricted dogs, fireplaces, swimming pools not realizing that an accident involving any of them will not be covered! If you hide the renovations or additions to your building, you will only receive a percentage of the money for your damages. If you rent your entire home to tenants and keep homeowners policy to save some money, the company may eventually deny your claim.

Are you OVERPAYING your insurance?
Let’s check; it doesn’t cost anything!