Insurance companies take on a lot of financial risks to secure your policies. In return for them taking such a large risk, they rely on their clients to be as honest as possible when filling out applications and providing valuable information they will need to secure your policies. Whether intentional or unintentional, being dishonest can dramatically increase the risk a carrier takes when underwriting your policies. If they find out about your indiscretions, the repercussions may be costly and long-lasting.
Why People Lie on Their Insurance Applications
People may try to lie on an insurance application if they are afraid they won’t be able to get the coverage they need. Others may lie by omission, believing that a partial truth will give them the advantage they need to get the coverage they want. Depending on the type of insurance they are applying for, the lies may become quite complex. Others are quite simple. No matter why the lies were told or why the information was omitted, it is illegal and may be considered fraud.
Common Lies Told by Applicants
People lie about all kinds of information. The most common lies are found on life insurance applications. People will claim they haven’t used tobacco or recreational drugs for many years when in reality, they are still using them on a daily basis. They may also lie about their mental health and personal or family medical history. Age, weight, pre-existing health conditions, and lifestyle habits are also frequent topics people lie about. People may also embellish about their income and occupations as well. Lowering premiums and improving their chances of approval are common reasons for being dishonest.
How Insurance Companies Verify and Cross Check Your Information
Insurance companies have many ways of verifying and cross-checking information they receive on applications. They will review your medical records and may even consult your physician. They can also contact the Department of Motor Vehicles and obtain a copy of your driving record. Many public records contain vital personal information. An insurance carrier will verify all of the information you put on your application by any means they possibly can. It may take them a little while, but they will continue to try and verify every bit of your information.
What Happens If an Applicant Is Caught Lying?
If you are caught lying or misleading your insurance agent, several things will happen. First, your application will be denied. Second, if you have insurance and it can be proven that you lied to get the coverage, your policy will be canceled immediately. Third, if you have lied to get coverage and claims have been filed against the policy, you may be required to pay all of the money back. In addition to paying back any benefits you have received, you will be reported to the Medical Insurance Board or other governing agencies. This may restrict your ability to get insurance in the future. Even if you get coverage, your premiums will be much higher, and you may have a much lower amount of coverage. If it is determined that you committed fraud, you may be charged with a crime.
Making an honest mistake is not considered a lie. It’s important to work with your insurance agent so that everyone is on the same page. Our experts at Jack Stone Insurance Agency can help you get the coverage you need. Being as honest as possible about your personal information will make things go much smoother. Call and talk to an agent at your earliest convenience.