Are you taking short cuts to save premium on your car insurance?

Failing to disclose information on your automobile insurance application doesn’t seem like it is a big deal but it can cost you more than you would have paid in premium had you been truthful.  Sometimes the omission of information is intentional consumer fraud, intentional lies in order to keep their premiums down.  For others it is an unintentional mistake, the result of a life changing event.  When one of these events happens, your auto insurance agent is usually not the first person you think of calling.  Below are a few of the most common questions that insured’s are tempted to answer with a “white lie”.

How many miles do you drive a year?   Many people report a lower yearly mileage to decrease the premium they will pay.  For others many changes go unreported that may have an impact on their insurance premium.   A change like getting a new job that requires the insured to drive more miles each year.  Or the insured moves further from their employer.  Did you know moving to another zip code has an effect on your premium?    This is especially true in larger cities where cars are parked in garages or rented spaces.

Are there any other licensed drivers in the household?  Many times a young teen that begins driving is not reported to the insurance company in a timely manner if at all.  Or a driver in the household has a driving history that includes accidents or tickets so they their name is conveniently omitted from the application when the question is asked to save premium or to be able to receive discounts or get their policy written in a preferred company.

How is your auto used?  Many insured’s don’t tell the insurance agent that they are using their car for business.  For example, an auto is used to deliver pizza or the family van is used to transport children to the park from their in home daycare.

Did you know that if a car insurance company finds out you have been dishonest on your application they can refuse to pay a claim or even cancel your policy?  What if that newly licensed teen or person you have not included as a licensed driver in your household is in an accident?  Or what about yearly mileage reported to the Department of Motor Vehicles when you license your car?  With today’s technology, insurance companies have numerous ways of finding out how many miles you drive each year.  For example, odometer readings taken at smog testing stations can be compared to what you told your insurance company.

When policies are written or renewed with an insurance company several reports are run prior to renewing the policy.  Driver’s license numbers are checked for tickets.  Reports are run to see what individuals live in the household and if any accidents have occurred that were not reported.  A soft hit on your credit report is run in order to assess a credit score that determines the risk involved to insure you.  Research has shown that individual with lower credit scores are more apt to file claims, some fraudulent, than those with higher credit scores.

Given the current state of our economy, don’t be surprised if the information you give to your insurance company comes under increased scrutiny.  When answering questions always be truthful and upfront.  If and when the time comes where you need to file a claim there will be no question as to whether or not a legitimate claim will be paid according to the policy provisions.  In the end, failing to disclose information is not necessarily going to save you money.  More than likely it will be more costly than the premium would have been had the information been disclosed.