3 Major Consequences of Lying to Your Insurance Company
What happens if you lie to your insurance company about an accident, your age or address? Are there consequences for lying to your insurance company?
Before we talk about the consequences of lying to your insurance company let’s first and foremost discuss how insurance works.
How Insurance Works
The way insurance works is that you reach a legal agreement that involves transferring the risk of financial loss from an individual or business to an insurer.
The insurance company collects small amounts of money from policyholders and pools that money together to pay losses. Insurance is basically divided into two major categories: property and casualty insurance (P&C).
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Why People Lie to Their Insurance Company
People lie to their insurance company for many reasons.
The reason why people lie to their insurance company could be for the purpose of getting a larger claim or so that they will pay less premium on their insurance.
Irrespective of what the lies are, they are all considered insurance fraud and are punishable under the law. Different types of insurance fraud will attract different measures of punishment.
Consequences of Lying to Your Insurance Provider
The most inappropriate thing you can do for yourself as a policyholder is withholding facts from your insurance company. Giving an insurer inaccurate information about your business, age, health status, home or car depending on the type of insurance that you want can land you in jail.
Although people do this for the purpose of saving money, what they do not realize is that they are also mounting unnecessary expenses on the insurance firm.
The outstanding impact of insurance fraud in the United States is that an insurance company is forced to pay for a claim that never happened, thereby incurring an additional cost.
In order to deter people from engaging in insurance fraud, we have decided to extensively discuss the consequences of lying to your insurance company.
Here are the consequences of lying to your insurance provider:
1. Your insurance provider reserve the right to cancel your policy
Did you know that your insurance provider reserves the right to cancel your policy if it is discovered that you lied about your age, address or car price?
When a policyholder is found guilty of manipulating figures or facts presented to your insurance company your insurance policy is going to be canceled. Check out how to cancel your UK car insurance policy.
One of the consequences of having your insurance policy cancelled by one insurer is that you will pay a higher premium in order to get a new policy elsewhere.
Anyone guilty of lying to their insurance company will be in a high-risk category which therefore automatically makes it even more difficult to get new insurance elsewhere no matter how much you are now willing to pay.
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2. Insurance claim will be denied if you are found guilty of lying to your insurance company
Lying to your insurance company will attract severe consequences that include being denied your claims when you need it the most.
A typical example is lying to the insurance company that you don’t drive your car every day but you actually commute 70 kilometres every day.
If you are involved in a car accident for any reason, you will surely be denied your insurance claim because you are guilty of lying to your insurance company.
3. Lying to your insurer can make your insurance premiums to go up
The information you present to your insurance company is what they use in calculating what your premium will be. They do this on trust believing that the facts you’ve given them are true and nothing but the truth.
Every information you didn’t disclose while getting a new policy will surely make your premium high when you move to a new insurance provider. But that’s if they accept you because it’s difficult for people in the high-risk category to get a new insurance company.
The moment your insurance company knows the accurate picture of your potential risk, your premium will go up. Here are other factors that can influence your car insurance premium this year.
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Conclusion
A little white lie doesn’t hurt many have said. But did you know that a little white lie is enough to invalidate your insurance policy and make you lose your claim?
Can you get into trouble for lying to the insurance company? The answer is yes. A false insurance claim is enough to take you to jail if reported as insurance fraud, increase your premium or deny you an opportunity to get an insurance policy for your car, life or business in the future.
