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Are You Guilty?

Did You Fib to Your Car Insurance Company?

Most people don't think twice about a little white lie that will reduce their car insurance premiums. Historically, it was extremely unlikely that you would get caught, and many older drivers learned early that they could fib and get away with it. Many of those, and less savvy younger drivers, are getting rude surprises in the form of unexpected increases and cancellations when they get caught by their insurance company with misleading or false information on their policy.

The industry is getting aggressive, since they view it as a more than $5B problem impacting their profits.

Lying to save on auto rates

So What Do People Fib About?

The misrepresentations are pretty common, but the methods insurance companies use to bust you are getting better and better. If you think you won't get caught, you are probably will. If you are fibbing on your insurance, think about this:

How much information gets captured at your State directed emissions test?

Think that's privileged information? Think again, State's make it available to your insurance companies and other data collection organizations.

5 Lies Consumers Tell Their Insurance Companies

1. Understating Mileage

This one can be deliberate, accidental or forgetful. People often do this deliberately; thinking it will, and can, get them a lower rate. But more often, it is just because they don't understand their driving habits, or their circumstances change, and they don't update their policy. Misstating mileage was the most common, and the last large study in 2008 showed it cost the insurance carriers more than $3B.

Understating mileage to save on car insurance

2. Not listing all the Drivers in a Household

Insurance companies estimate that if you pursue policies written for households are written without accounting for all the drivers that are in the household following planning insurance data collection organization is done extensive studies determined that unrated drivers accounted for $2.6 billion and loss premiums in 2008. The most commonly forgotten drivers happen to be teenagers, one type of driver that will increase costs of insurance premiums quicker than anything.

3. Covered Vehicle Discounts

Garages and covered parking, especially the city, are very common discounts on most insurance policies. Misrepresenting how to your vehicle is in stores and become a common trend in the past several years. Location discrepancies led to $1.3 billion in lost premium in 2008.

4. Wrongful Discounts

Policyholders are notorious for not updating their information. Often they neglect to update their policy when a canceling memberships and organizationally gotten a discount, James the waiter cartridge stores, or other profile information that was on for forgetting the discount when the policy was written.

In some cases, drivers conveniently forget to tell their car insurance agents that the conditions that gave them a discount have changed. For example, perhaps they ended membership in an organization that made them eligible for a special premium rate. Mis-applied discounts, based on misinformation about the driver or the car, added up to $2.9 billion in 2008.

5. Using the Car for Unnamed Purposes

Because it implies more mileage many customers fail to tell her insurance company that they're actually using the car for business. With the proliferation of telecommuting and home offices many people list their office as their home and that they don't drive but in reality they're driving to the office or on sales calls to three times a week dramatically rising mileage over what insurance company estimates for a home based employee. Insurers lost $1.5 billion in premium as a result of this type of misrepresentation.

The Longer You Lie, the More Likely You'll Be Caught

The driver not listed on your policy, but living in your household, that has an accident is the obvious faux pas. The industry is becoming more and more reliant on state reported emissions information and data/studies provided by companies like Insurance companies. The company puts an insurer's policies through a battery of more than 150 tests, cross-referencing data and employing pattern-matching algorithms to identify errors and discrepancies that suggest fraud or misrepresentation.

According to Quality Planning, every 1 percent reduction in rating error can result in a 20 percent profit gain. So don't be surprised if the information you report to your car insurance company comes under increasing scrutiny.

Why you will get caught

Why Should You Care About Lies?

Other than the obvious moral implications you should care about who's telling the truth on their auto insurance policies. Ultimately the honest customer is the one that ends up paying the premiums for the ones that are not. In addition, if a car insurance company catches you in a lie, it can cancel your policy and refuse to pay your claim - assuming you provided inaccurate information intentionally.

Some of the misinformation reported to insurers stems from outright consumer fraud - people deliberately lying to their car insurance companies in order to score lower premiums. Most misinformation is the result of unreported lifestyle changes. For example, in 52 percent of household auto insurance policies, there's a change in the vehicle or drivers each year. And more than 25 percent of workers change jobs every year, which affects the number of miles driven, according to Quality Planning. These types of changes are commonly not reported.

 

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