The concept of car insurance relies on good faith. As the owner of the vehicle you put your faith in the insurance company to provide you with financial assistance when you have an emergency involving your vehicle. Likewise, the insurer puts faith in you by assuming that all the information you provide them with during the underwriting process is correct and based on truth. If either one lies about any information, car insurance will not work. Therefore, it is important to always be honest with your insurance company.
To get a better understanding of this let’s take a look at what can happen if you lie to your insurance company.
Cancellation of Car Insurance Policy
in the event of false information being provided when insuring an item or renewing your policy, the insurer has the right to cancel your policy when the truth is discovered. This happens because the incorrect details provided by you makes the policy invalid. As a result, your vehicle will be without insurance until you find alternate cover. Putting your vehicle and yourself at a risk.
Rejection of a claim
Insurance companies sends an assessor to inspect the vehicle when a claim arises. The assessor will carefully examine every part of the vehicle to better understand the extent of damage. If you had lied about something a claimed for an uncovered risk, the assessor will find out the truth. The insurer can then reject your claim and you will have to repair the damages on your own.
Payment of penalties
if the insurer finds out that you lied at the time of underwriting a new policy or renewing a policy, the insurer can levy a fine or penalty on you. You may be required to pay a fine to continue with your insurance and prevent the insurer from lodging a legal complaint.
Legal consequences
An insurance policy is a legal contract between the insurer and you. Any breach in the contract can land you in legal trouble. A complaint of fraud can be filed against you by the insurer. If proved you could pay a hefty compensation or land yourself in prison for telling a major lie.
Increase in your premiums
The insurance company generates the premium based on the information you provide. Lying to the insurance company to get a lower premium means that you are insured incorrectly. When the insurer finds out the truth they may increase your premiums, that is if they still wish to keep you on as their client.
Denial of car insurance in the future
When an insurer finds out that you provided false information when taking out or renewing the policy, they can cancel your policy on the accounts of fraud and manipulation. A cancelled policy due to fraud can make it difficult for you to obtain insurance in the future. Lying can land you in major trouble. Instead of lying to get a cheaper premium, it is better to compare quotes before committing to an insurer. Doing so will enable you to get the best cover without putting a hole in your pocket.
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