There is no getting around it: if you want to drive a car in Ontario, you need to have auto insurance. Lying on your insurance application can leave you without coverage. Without it, you could be looking at fines between $5,000 to $50,000, a license suspension, or worse yet, getting into an accident that causes injury or death and being held personally responsible for the costs.
It pays to have auto insurance. It also pays to tell the truth on your insurance application. Ten percent of Ontarians think that it is okay to defraud an insurance company. However, as tempting as it may be to understate how many kilometres you drive each year, lie about where you park your car at night, or even misrepresent who the main driver is all in order to save a few dollars each month, being dishonest on your application could cost you a lot more in the long run. Here are five of the biggest risks of lying on your insurance application:
Once you misrepresent yourself in an insurance application, your provider no longer has an obligation to pay your claims. For instance, if you said in your application forms that you always install winter tires during the icy months, but then skid out of control one snowy December night with your summer tires on, your insurance provider can say you misrepresented the state of your car and promptly deny your claims. As a result, your insurance will be invalid and you’ll have to cover any costs out of your own pocket.
Insurance companies do not like being lied to. If they find out that you did not tell the truth in your application, they are likely to penalize you in the form of higher premiums and there will be little you can do about it. This does not only go for your current provider. Even if you switch companies, you may still face higher premiums. You will find yourself longing for your old premium that once seemed so expensive.
Your insurance provider could also choose to simply cancel your policy outright. After all, it is not in their best interests to keep a client that misrepresents themselves. This then leaves you in the tricky position of not being able to drive at all until you are covered under a new policy, with all of the consequences that may come by not having access to a car. You will also have to find an insurance company that is willing to take you on despite your last rejection, which could prove difficult.
You will be seen as a fraudulent and high-risk client, which may make finding a future policy extremely expensive, if not impossible.
If you are thinking so far that the risks do not seem so bad and that you might be willing to play the odds if all it means is paying a higher premium, think again. Insurance fraud is a criminal offence. If convicted, you can face up to 14 years in prison. Even after imprisonment, you will have a criminal record that could make everything from finding a job to renting an apartment difficult, not to mention the stigma of being a criminal, which could affect your family and personal relationships.
Auto insurance fraud is a big business. In a recent report, fraud was found to cost the industry in Canada up to $2 billion a year. That is why insurance companies invest heavily in investigators whose sole purpose it is to verify applications and find those that are not accurate. You can help fight fraud and lower premiums for yourself and all other drivers. Be sure to fill out your application forms correctly and have not made any mistakes. If you are unsure about something, call your insurance provider to discuss.
There is no question that car insurance can be expensive, which makes looking for ways to ease the financial burden all the more tempting. The annual average cost of car insurance in Ontario is $1,920. The odds of getting caught may seem small but the consequences are not worth the risk of lying on your application.
The same goes for home or any other kind of insurance. Deliberately misrepresenting your home on an insurance application will catch up with you. Lying can wind up costing you much more in the end.
Bite the bullet today and be upfront in all of your insurance applications. It will save you from potentially expensive or even criminal consequences down the road.
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