The Importance of Honesty When Applying for Car Insurance

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Have you ever considering being slightly dishonest when answering questions about when last you claimed on a vehicle insurance policy? It might not seem a big deal to you. After all, anything to save on your car insurance policy. The global insurance industry notes that it is difficult to measure insurance fraud; Unfortunately, there are many different agencies who attempt to gather and collate fraud statistics, resulting in patchwork-type insurance statistics. Therefore, it is challenging to make sense of insurance fraud.

What is insurance fraud?

Before we look at a number of reasons why it is important to answer the insurance application questions honesty, let’s look at a formal definition of insurance fraud:

In short, insurance fraud is an act which attempts to influence the outcome of an insurance claim by deceiving the insurer. This deception usually occurs when the claimant provides incorrect information to the insurance company either when taking out an insurance policy or during the claim submission process.

For example, should you require vehicle insurance, and you have claimed for an accident in the last couple of years, if you alert your broker or online comparison site such as Compareemcasa to this fact, your no-claim bonus will be reduced, and your monthly premium will be increased. You are required by law to provide the insurer with the correct information; however, you are guaranteed that your premium will increase. On the other hand, should you ignore the previous accident, your no-claim bonus will increase, your monthly premium will decrease, but you run the risk of being found guilty of insurance fraud.

The sole reason why you should be totally honest when you are applying for vehicle insurance

The harsh fact is that committing insurance fraud is a crime, and you can be awarded a prison sentence should you be found guilty of this crime. Even though insurance fraud can be considered a soft crime, you still run the risk of ending up with a criminal record. At best, your claim will be rejected, and you can be flagged by insurance companies to prevent you from successfully applying for insurance ever again.

Questions that inspire dishonesty

This article speaks at length about the importance of answering your insurer’s questions during the insurance application process honestly. Insurance policy premiums are risk-based. Ergo, if the vehicle insurance industry deems that there is a high-risk of you having an accident then they will increase your monthly premium. It is worth noting that the risk calculation is based on industry statistics such as the average age of the group of people that have the highest number of vehicle accidents.

This being said, let’s now look at a few of the more important questions:

  • How old is the main driver of the vehicle and how long have they been driving?

The highest vehicle accident risk category is drivers under the age of 25 years old who have been driving for less than two years. Therefore, if your vehicle’s main driver fits into this category, either your monthly insurance premium will be very high, or the excess that you are required to pay in the event of an accident will also be very high.

  • When was the last time that the driver had a vehicle accident?

Even though the driver had an accident and did not claim for the accident, it is still important to let your insurer know about the accident.

  • How old is your vehicle, and what is its mileage?

The answer to these questions will influence the total replacement value of your vehicle should it be stolen or involved in a serious accident.

Melissa Thompson writes about a wide range of topics, always revealing interesting things we didn’t know before. She is a freelance producer for USA Today, and a contributor at Technorati. She lives in Utah with her 2 kids and husband. Melissa Thompson can be reached via LinkedIn or Twitter @melthompson88. Please follow and friend her on either site.