What are the most common auto insurance application lies?

On Behalf of | Jun 27, 2017 | Insurance Law

Being lied to can be very harmful. This isn’t just the case for individuals, but for companies too, such as auto insurance companies. Among the lies auto insurers could end up being subjected to are lies told by their policyholders.

Dishonesty by policyholders could have the potential to have big negative financial ramifications for auto insurers. So, keeping an eye out for red flags that a policyholder might have given them incorrect information can be important for such insurers, particular when reviewing claims. When an insurance company detects a possible policyholder lie when reviewing a claim, the lie could raise complex legal issues related to the claim. When a complicating issue comes up in connection to the handling of an insurance claim, such as the discovery of a policyholder lie, an auto insurer may want to go over the issue with an experienced insurance lawyer.

Among the times individuals sometimes lie to auto insurance companies is when applying for a policy. Some individuals might turn to such lies to try to get a lower policy rate.

How common is lying on auto insurance applications? According to a recent NerdWallet report, around a tenth of Americans have told such lies.

What lies are most common on auto insurance applications? According to the NerdWallet report, the three lies most commonly reported by individuals who said they had given incorrect information when applying for a new policy were:

  • No. 1: Saying they drive fewer miles than they actually do.
  • No. 2: Leaving a person off the policy.
  • No. 3: Lying about the way the vehicle will be used.

Why do you think these application lies are particularly common? What do you think are the best ways for insurance companies to safeguard themselves against such lies?

Source: CNBC, “Liar, liar: Here’s what drivers fib about when applying for auto insurance,” Kelli B. Grant, June 13, 2017