Why it's important to be honest with your insurer

By SmartCoverage Team on April 2nd, 2018

The phrase “honesty is the best policy” best describes how you should approach your attitude towards insurance. If you lie on your insurance application or give false information to your insurer, once you are approved as a client, you could see major negative repercussions down the road. Let’s take a look at just what those repercussions could be if you decide to be less than honest with your insurer.

The possibility of a denied claim

If you put forth a claim, and your insurer realises you lied to them, they are within their rights to deny your claim, meaning you are out the money you could have gotten from your insurer. For example, if you apply for travel insurance and fail to specify that you have a pre-existing condition, you could be stuck paying for hefty medical bills out of pocket in the event that you get sick while away. Or, if you lie and say you have snow tires to get an auto insurance discount and get into an at-fault accident in the winter months, you could be landed with the bill to repair the damages to both your vehicle and those of other involved parties.

When you agree on a policy, you sign off on the fact that your information is correct, and you are covered for what parameters are mutually agreed on. If you lie to get yourself a discount or breaks on your premium, your insurer will not cover the cost of a claim outside of what was previously agreed upon. As a result, this costs you more in the long run.

May void existing coverage

Aside from your claims being denied by your insurer, you could also find yourself with a voided policy. If you are dishonest with them regarding the policy you agreed upon, you are essentially breaking your contract with your insurer. In response they can void your coverage, forcing you to look elsewhere for your property, auto, etc.

Problems finding insurance in the future

If your policy is voided for being dishonest, you will find that moving forward you will have a hard time finding a new insurer, and if you do find someone to take you on, your premiums will cost you more. Your insurer wants to assume the lowest amount of risk possible when taking you on as a customer, and they would see your dishonesty as a high level of risk. So, many insurers would be wary about taking you on if you are labelled as a dishonest customer. And if they do, they would be forced to charge you more for your coverage.

Legal action could be taken

In some extreme cases, legal action can even be taken against you for lying to your insurance provider. Insurance fraud can be a serious offence and can result in anything from a fine, all the way to jail time. For this sort of action to be taken, serious fraud would need to take place, but it is best to err on the side of caution and just always remain truthful when filling our your application or changing your policy in any way.  

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