What are the consequences of lying to your car insurance company?

Lying to your insurer can bring a range of penalties, including increased rates, policy denial, fines, or even imprisonment depending on the situation.

Andrew Hurst

By 

Andrew Hurst

Andrew Hurst

Senior Editor & Licensed Auto Insurance Expert

Andrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

Updated  | 5 min read

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When applying for car insurance, it can be tempting to withhold details or stretch the truth to get the cheapest rates possible. However, misrepresenting personal details, including your age, driving history, and where you live could carry serious consequences. 

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Drivers who give their insurance companies false information will pay more for coverage once their lies are discovered. They may also be denied insurance altogether, and could find it difficult to get covered in the future. Intentionally lying to your insurance company is a form of fraud, and could result in fines, community service, or even jail time.

Key Takeaways

  • If you lie to your insurance provider, you could be denied coverage, quoted higher rates, or face penalties like fines, community service, or even prison.

  • It doesn't matter whether you lied intentionally or gave incorrect info to your insurance company by mistake — insurers can still deny coverage and could pursue other penalties.

  • Making a fake car insurance claim is an example of hard fraud and is a felony, while it's considered soft fraud when a policyholder misrepresents personal details.

What happens if you lie to your insurance company?

At the very least, the cost of getting car insurance could get more expensive if you lie to your insurance provider. Once insurers discover that you've misrepresented yourself when applying for coverage, they'll adjust your policy. You'll pay higher premiums in the future, while also being responsible for paying old payments in full.

Some policyholders who lie to their insurance companies could see even more serious consequences than higher costs of coverage. Insurers may deny coverage after a claim if they discover that the information you provided was incorrect. Since lying on an insurance application is a form of fraud, you could also face civil punishments, like fines, community service, and even jail time, depending on whether your insurer presses charges.

Not every applicant who gives false information means to lie to their insurance company, but insurers won't distinguish between a lie and an honest mistake if they discover the truth. If you find out you've made a mistake on your application, you should contact your insurer ASAP. While you may see higher premiums once the insurer adjusts your rates to align with your updated information, you're also more likely to avoid harsh punishment.

What are the types of auto insurance fraud?

The two types of auto insurance fraud — hard and soft fraud — result in an estimated loss of $40 billion a year, according to the FBI [1] . Hard fraud is less common than soft, and typically involves making a false claim in order to collect a payout.

On the other hand, soft fraud refers to when drivers lie to their insurance provider about the amount of damage when they make a claim, or about personal details while applying for coverage. No matter the type of auto insurance fraud, lying to an insurance company is illegal.

Read more about the forms of auto insurance fraud

4 common ways drivers lie to insurance companies

There are a number of ways drivers can falsify their personal details to get lower costs on car insurance. They may lie about:

  • Number of claims on their record

  • Number of drivers in the household

  • How often the insured vehicle is driven

  • Where the car is kept

The easiest way for drivers to get cheaper auto insurance is to compare quotes online from multiple providers in their area. (Hot tip: Our licensed insurance agents at Policygenius can do all the work for you!) While rates can be high for young drivers or people who’ve been in an accident before, they’ll work to find the cheapest insurance coverage you qualify for.

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Number of past accidents

Drivers who’ve been involved in a previous car accident often pay more for auto insurance than those who’ve never been in a crash. While it may be tempting to lie to a new insurance provider about your driving record, there's a good chance they'll discover the truth.

Insurance companies will check your driving record after you submit an application for coverage. If they uncover any accidents, violations, or claims that you didn't disclose, you could receive higher rates or lose coverage altogether.

Number of drivers in the household

Just as drivers with a prior crash on their records pay more for insurance than those with clean records, car insurance for teenage drivers is more expensive than for older drivers. While premiums typically decrease as you get older, rates can remain high until you’re in your 20s.

Because of this, an applicant may lie to their insurance company about the age of drivers in the household. They could also lie about who operates an insured vehicle by not listing a teenager as a car's primary driver.

In any case, if someone who lives in the household is involved in an accident and has to make a claim, car owners could have trouble getting damages covered. They may instead be forced to pay for repairs themselves.

Read about how to exclude high-risk drivers from a vehicle's coverage

How often the car is used

The more a vehicle is used, the more likely it is to be involved in a crash over a long period of time. As a result, it costs more to insure a car that's used for your daily work commute than it does for one that's kept in a garage for weeks at a time.

Similarly, insurance companies often ask how a car is used — whether it's used for business, personal use, or recreationally. Your answer to this question can also affect your cost of auto insurance, as it's tied to the amount your vehicle is used and the type of damage it could encounter.

While you could claim that you drive fewer miles in order to qualify for a lower rate or a low-mileage premium discount, lying to your insurance provider about how much your car is used could result in coverage being denied in the event of damages. 

Where the car is kept

Because drivers usually keep their cars at their homes, their car's garage will match their address. However, occasionally a policyholder will keep their car at a separate location. This only becomes a problem if you claim on your application that the car is kept at a different location than it actually is in order to save money.

For instance, a driver living in a state where insurance is expensive, like Michigan or New York, could claim their car is garaged and driven in a less expensive state that's nearby, like Ohio or Pennsylvania. 

If you have to make a claim after an accident, the insurance company will ask you where you were driving. If you were driving to work or to pick up a family member, they'll quickly figure out that your car is actually garaged in a place that's different from what you claimed — and you could face consequences.

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Frequently asked questions

How far back into your claims history do insurance companies look?

Typically, insurance companies look three to five years into your past to set your rates. As time passes, costs will decrease steadily — provided you stay accident-free.

Do you have to tell insurance companies about tickets?

No, because insurance companies can access reports on your driving history themselves to reveal past tickets. If you get a ticket for speeding or another violation, your insurer will find out when they pull your report at the time of renewal — and likely raise your rates to match the increased risk. If you're a new applicant, lying about a ticket to your insurance company runs the risk of making you ineligible for coverage, just as other lies would.

What happens if you file a false claim about an accident?

Filing a false claim is a form of insurance fraud. Policyholders who make fake claims could face serious legal consequences if they're found out, possibly including jail time. Exaggerating a claim after an accident or lying to an insurance adjuster to receive a higher payout is also fraud.