Why It Is a Bad Idea to Lie on Your Insurance Claim

If you’re thinking about lying on an auto insurance claim, you certainly wouldn’t be the first. According to a study performed by the Insurance Research Council in 1996, an estimated 21-36 percent of car insurance claims have suspected fraudulent elements. In other words, one in three auto insurance claims could contain false information of some kind.

Auto insurance fraud is clearly not uncommon, but that does not mean that you should follow the trend. Moral issues aside, lying on a car insurance claim could jeopardize your freedom and your future. Read on to learn why falsifying information on a claim could put you in a world of hurt.

Cancellation of Coverage

When your car insurance company finds out you filed a fraudulent auto insurance claim, and they usually do, your coverage will be canceled immediately. This can have a huge effect on your ability to find affordable auto insurance in the future. And if that’s all that happens to you after falsifying an insurance claim, consider yourself lucky. Still, coverage cancellation is no picnic. Finding a carrier that will write you a policy with a fraudulent claim and a gap in car insurance coverage on your record will be next to impossible, and on the off chance you do find coverage, your premiums will be sky high. If money was your motivation to lie on a car insurance claim, you will end up losing far more than you ever would have gained.

Legal Action

Depending on how serious your car insurance claim lie was, your insurer may choose to take legal action. Remember that insurance fraud is a crime under state and federal law. In most states, auto insurance fraud is classified as a felony. Should your insurer choose to prosecute and ends up obtaining a guilty verdict, you could face massive fines and/or several years in prison. Because you chose to lie on an auto insurance claim, you might have a felony on your record for the rest of your life.

End Result

Auto insurers are much smarter than you think, and they are used to dealing with and catching people who falsify car insurance claims. The odds are overwhelming that you will get caught; insurers have entire divisions devoted to the investigation of suspected fraud. So, in the end, you will most likely end up without the money or benefits you were hoping to gain, and in committing insurance fraud, you have raised insurance costs for everyone else. One recent estimate indicates that insurance fraud costs the average American family more than $1,800 in extra premiums every year.

The bottom line? If you’re thinking about lying on a car insurance claim, don’t. You’ll ruin things for yourself and everyone else by doing so.