Auto Insurance Lies: Your Rights And Recourse

Lying about auto insurance is a form of insurance fraud and can have serious consequences. People often lie to their insurers to save money, get more money in a claim settlement, or obtain a car insurance quote when they are not eligible. While it may seem harmless, lying about auto insurance can cost insurers billions of dollars, leading to higher premiums for consumers. If caught, individuals may face fines, penalties, and even jail time. Additionally, their policies may be canceled, and they may struggle to find future coverage. To avoid this, it is crucial to be upfront and honest with your insurer and seek alternative ways to save on premiums.

Your insurance policy could be cancelled

Lying on your car insurance application is considered fraud and can result in your insurance policy being cancelled. Insurance companies do not want to work with individuals who lie and try to take their money. If your policy is cancelled due to misrepresentation or non-disclosure, you will likely have to pay more to get a new policy elsewhere. Policy cancellation for non-disclosure puts you in a high-risk category, which makes it harder and more expensive to get car insurance.

In the US, state laws usually limit what an insurance company can include as reasons for the cancellation of the policy. The policy contract specifies the reasons the insurer can cancel the policy and the time frame and method in which it can do it. In most states, an insurance company must give a policyholder written notice of cancellation at least 30 days before cancelling the policy. However, during the first 60 days of a new policy, your company may cancel for almost any reason. After this period, your company may only cancel you for reasons such as failure to pay the premium by the due date, obtaining the policy through fraud, or making a false or fraudulent claim.

If you believe your company failed to follow the required steps when cancelling your policy, you may appeal the cancellation. You can also try to halt the cancellation by providing a satisfactory solution to the complaints made by the company. For example, if your insurance is being cancelled due to too many claims, you can ask if you can remove that specific coverage from your policy going forward.

Your claim will be denied

If your car insurance claim is denied, it's important to understand the reason for the denial before taking any next steps. The denial may be something you can appeal, but surprise denials often occur due to stipulations in your policy that you may not have been aware of.

One of the most common reasons for a claim being denied is that the insurance company's investigation concluded that the accident isn't covered. This could be because the person bringing the claim didn't tell the truth about their daily driving habits, for example, saying they don't drive their car to work every day when in fact they have a 50-kilometre commute each way. If they then get into a collision during their commute, the company may deny their claim because they didn't tell the truth about how they use their car.

Another reason for a claim denial could be that the person bringing a first-party claim isn't covered under the car insurance policy. This could be because there was a violation of the contract, for example, by having the car fixed before filing a claim. Or it could be because the vehicle wasn't listed on the car insurance policy, or because the insured lied to the insurance company when applying for coverage.

If your claim is denied, you can appeal the decision. Your insurer will likely have a process in place for you to contest a denied claim. Here are some steps you can take:

• Submit a letter asking for an appeal. Appeals often involve a letter stating your reason for requesting the appeal. You'll also want to include any supporting evidence you have.
• Document the evidence. Keep all documents relating to the accident safely filed to provide as supportive evidence. This may include photos from the scene, a police report, or medical information.
• Consider hiring legal counsel to help with your appeal. If you need legal advice after an accident, hiring a representative to help with your appeal could get you better results.

Your insurance premium will go up

If you lie on your car insurance application, there are several consequences you may face, including losing your policy, fines, or fraud charges. One of the most significant repercussions is that your insurance premium will likely go up.

Insurance providers calculate premiums based on the information you provide about your driving history, such as the number of accidents or traffic violations. If you withhold or misrepresent this information, the insurance company will reassess your risk level once they uncover the truth. As a result, your premium will increase to match the higher risk they now perceive.

For instance, if you have had multiple accidents or moving violations, such as speeding or driving under the influence (DUI), your insurance company will consider you a high-risk driver. This label will lead to a significant jump in your premium. Similarly, if you have a history of comprehensive claims, such as for car theft, vandalism, or weather-related damage, your rate will likely increase.

The increase in your premium is a way for the insurance company to mitigate the higher risk they are taking on by insuring you. By raising your premium, they are accounting for the increased likelihood that you will need to make a claim in the future.

It's important to remember that insurance companies have access to national databases that contain information about your driving record, including tickets and violations. Therefore, it is challenging to hide your true driving history. Being honest about your driving record and circumstances is always the best policy, even if it results in a higher premium initially. This honesty will help you build trust with your insurance company and may even lead to future discounts for good behaviour.

You could be denied insurance in the future

If you lie about your auto insurance, you could be denied insurance in the future. This is because lying on an insurance application is considered fraud, which can result in serious consequences. These consequences can include having your insurance policy cancelled, being denied coverage in the future, and facing higher premiums.

Insurance companies rely on honest information from their customers to issue the right policy at the right premium. When they discover that a customer has been dishonest, they may categorise that customer as high-risk, making it harder and more expensive for them to get insurance in the future.

Additionally, lying about auto insurance can lead to legal consequences, including fines, penalties, and even jail time. Insurance fraud is a criminal offence that can result in felony charges and a permanent criminal record.

It's important to be upfront and honest with your insurance company and provide accurate information about your driving history, vehicle, and personal details. While it may be tempting to lie to save money, the risks of being caught far outweigh any potential financial savings.

You could face legal consequences

Lying on an insurance application is considered fraud, which has serious legal consequences. If you are caught lying to your insurer, you could face criminal penalties, including jail time, substantial fines, and a permanent criminal record. In Georgia, for example, lying to your insurance company about the details of a car accident is a felony offence, punishable by up to 10 years in prison and/or a fine of up to $10,000.

The specific penalties for insurance fraud vary depending on the jurisdiction and the severity of the fraud. In Canada, for instance, there are three tiers of fraud under the Criminal Code: fraud under $5,000 carries a maximum sentence of two years in jail, fraud over $5,000 carries a maximum sentence of 14 years in jail, and fraud over $1 million carries a minimum sentence of two years in prison.

Insurance fraud also has financial consequences beyond legal fines. If your insurance company pays out a fraudulent claim, you may be held responsible for the amount and forced to pay it back. Additionally, insurance companies can sue you to recover costs and damages.

Furthermore, lying on an insurance application can lead to issues with your insurance coverage. Your insurance policy could be cancelled, and you may struggle to find a new insurer or obtain coverage in the future. Even if you do find a new insurer, your premiums will likely increase due to being labelled as a high-risk driver.

Frequently asked questions