November 3, 2017

What Happens if You Give False Info in a Car Insurance Application?

When applying for auto insurance, drivers must answer a slew of questions. Some of these, such as a vehicle’s VIN, make, and model, are easy for insurers to verify. Other questions, like how many miles a vehicle is driven each year, are a little more difficult for insurance companies to check. It’s important to still answer these other questions honestly, though. Here’s a look at what might happen if a Massachusetts resident wasn’t honest and provided false information when applying for car insurance.

If a Massachusetts Resident Gave Their Car Insurance Company False Information When Applying for a Policy, What Would Happen?

Fudging Answers is Often a Form of Fraud

Providing false answers, including just fudging them slightly, is generally considered a form of insurance fraud. Specifically, it’s normally deemed “soft fraud.”

The term “soft fraud” is used to distinguish this form of fraud from what’s known as “hard fraud.” Hard fraud is normally a deliberate attempt to invent or stage an incident that would be covered by an insurance policy. In this case, the very claim itself is typically invalid — either being made up by the policyholder or intentionally caused by them.

Soft fraud, in contrast, is normally an act where policyholder takes advantage of an opportunity available to them. Unlike with hard fraud, a policyholder doesn’t deliberately set out to rip off their insurer. If the opportunity presents itself, however, they might be tempted to incorrectly use it to their benefit.

For example, assume a Massachusetts resident was running errands in Winchester, MA and was involved in a fender bender. When they went to report the damage, they exaggerated slightly in hopes of getting a larger claim. This would probably constitute soft fraud. The claim (assuming it met the policy’s coverage terms and conditions) was valid and not intentionally caused by the policyholder to collect a payment. The information that the policyholder reported, however, wasn’t entirely truthful.

Another common example of soft fraud is when people provide false information on car insurance applications. In order to increase the chances of their claim being accepted or reduce their premiums, they might not answer questions completely honestly. Even fudging answers a little, however, is dishonest and can be considered soft fraud because it takes advantage of an insurer.

Soft Fraud Can Jeopardize Coverage

Most people are aware that this form of fraud is wrong, and can have serious insurance and legal consequences. Soft fraud, however, is also a serious issue and can jeopardize coverage.

By giving false answers when applying for auto insurance, drivers prevent insurers from accurately assessing the risk they’re taking on and charging premiums accordingly. In other words, drivers aren’t paying for all the protection they’re receiving.

Should an insurer find out that false information was provided by a Massachusetts resident when they applied for auto insurance, the insurer may deny a future claim that they have. After all, soft fraud is fraud, and fraud may be deemed sufficient grounds for revoking coverage.

Answer Massachusetts Insurers’ Questions Honestly When Applying for Car Insurance

Thus, it’s best to answer all questions truthfully when applying for car insurance. Giving a false answer might save you a few dollars on premiums, but it could cost you a lot more if your coverage is denied when you have a claim. Being honest is the ethical thing to do, and it’ll ensure you have the protections you sign up for. If you’re afraid any answers will have too much of a negative effect, your independent insurance agent can help you mitigate any effect caused by an answer without giving false information.

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