If you’re not completely truthful on your auto insurance application, your insurance company may deny a future claim or even cancel your policy. Most policies contain warnings allowing for cancellation or non-renewal if you intentionally neglect to disclose or purposely omit information on your application.
For example, not listing all drivers in the household, such as teens, or failing to state that you use your car for business, can place you in legal trouble.
Failing to disclose previous damage is another potentially troublesome omission. In other words, don’t try to pass off a dented door panel from last year as something that happened during an incident from last week.
Whether or not the new or old damage is your fault, the claim could be delayed or even denied if the insurance company — yours or the other guy’s — finds out you’re trying to pass off previous damage as new. Your insurance company may even seek to recover damages from you. You will also be blacklisted by other insurance providers.
Below are common auto insurance application mistakes that people don’t realize may have big consequences.
1. Not mentioning newly licensed drivers who use the car. Like the scenario above, not mentioning a driver who uses the car to save some money on your premium may have severe consequences.
2. Withholding drivers’ names. This is similar to the one above, but it may be your mother who borrows your car once or twice a week to go have coffee with her friends. If you need to make an insurance claim for an accident that happened while she was driving, it would not be covered.
3. Inaccurate mileage driven. By intentionally claiming a much lower mileage than you really are driving, it can harm you in future claims. Insurance companies want to know accurate information and have the right to adjust or cancel your auto insurance premium if they find false information.
4. Lying about driving history. Some may not mention previous accidents that the car has been through, but auto insurance companies already have access to your DMV records with accident history. It is best to admit to accidents when you’re applying for auto insurance policies.
5. Not mentioning business travel. Business travel should be mentioned in your insurance policy, especially if you have to drive 50 miles to a meeting every week. More driving distance is more risk for accidents and auto insurance companies need to know this information to give you the best coverage possible.
6. Lying about your address. This is considered as fraud. And if your insurer finds out, they can cancel your policy and/or refuse to pay a claim if you are involved in an auto accident.
Auto insurance companies want to provide you the coverage you need for your car, but it is your responsibility to give accurate information on the application and on the surveys requesting updated information. Auto insurance may cost you more than you’d like to spend, but if you shop around, you can save money on car insurance and be confident in your insurance claim being taken care of without the possibility of false information backfiring.
Have you ever fibbed on your application? Feel free to share your thoughts and experiences in the comments section below.