Auto Insurance Misrepresentation: Simply Explained (2024)

What is Car Insurance Misrepresentation?

When you apply for car insurance, your insurance company will ask you a number of questions. If you fail to answer these questions honestly or accurately, then you have committed material misrepresentation.

In other words, misrepresentation is a fancy word for lying on your car insurance application.

Material misrepresentation is no joke. You can be accused of misrepresentation for lying about anything on your car insurance application. In some cases, misrepresentation can lead to a denied car insurance claim, a loss of insurance coverage, a fine, or even prison time.

Some drivers are accused of misrepresentation after they accidentally omit information about themselves. Other drivers are accused of misrepresentation for knowingly lying about various facts on their application – like using a stolen identity or lying about a previous accident.

What Happens If I’m Accused of Material Misrepresentation?

If you’re accused of material misrepresentation, then you could face minor or serious consequences. It depends on the severity of your misrepresentation.

Some of the possible consequences include:

• Loss of insurance coverage
• A fine
• Prison time
• Higher insurance rates

In many cases, an insurance company will discover that someone has lied on their insurance application but will not reject the claim. Instead, the insurance company will rectify the information, then charge you higher rates on car insurance.

Is Material Misrepresentation Common?

Misrepresentation is a relatively common act. In most cases, misrepresentation is an accident: someone might enter the incorrect birthdate or forget the year of their vehicle, for example. Or, you might claim you’ve been continuously insured for 5 years when it’s really only been four years. These are minor clerical errors that can easily be fixed without penalty. In most cases, your insurance company will discover these errors during their underwriting process, then update your policy without assessing a penalty.

In other cases, however, misrepresentation is a deliberate attempt to mislead an insurance company.

For example, a driver frustrated with paying high insurance prices after a DUI might apply for a new insurance policy while conveniently omitting the DUI from the paperwork.

Other drivers might lie about their marital status as a form of misrepresentation. Married drivers typically pay lower rates for car insurance.

The “primary driver versus secondary driver” issue is another common type of misrepresentation. Many people lie about the primary driver of the vehicle in order to get cheaper insurance. Someone in the house might have a DUI, so their vehicle gets insured under a different individual’s name for a cheaper rate – despite the fact that the individual with the DUI is the only one driving the vehicle.

The number of traffic violations you’ve received, your criminal record, the vehicle’s storage location, your vehicle’s safety features, and other information are other common lies told on insurance applications. These are all types of material misrepresentation.

Read more:

• What is the difference between primary and secondary auto insurance coverage?
• Does my auto insurance cover damage caused by a DUI or other criminal activity?

Will Misrepresentation Be Caught?

It’s quite literally the car insurance company’s job to verify the information you provide. After you request a quote and approve the rate, the car insurance company may begin the underwriting process. In partnership with government organizations and law enforcement, the insurance company will investigate various aspects of your application.

Typically, any lies you’ve told will be easily uncovered during the underwriting process.

In the rare case that you don’t get caught, the insurance company may provide a car insurance policy to you – only to reject your policy when you need to make a claim.

The company will investigate various information during the underwriting process. However, if you ever need to make a claim on your policy, and your insurer is suspicious about the information you’ve provided, then the investigation will be renewed with vigor.

After an accident, an insurance company might review everything from security cameras to social media posts to determine the facts about your claim. If you’ve lied about being a secondary driver when you’re really a primary driver, for example, then an insurance company might review social media posts, photos, and other information to prove you’re driving the vehicle more than you’ve stated.

For all of these reasons, it’s best to avoid committing material misrepresentation. In most situations, misrepresentation is quickly caught and punished.

Read more: How Social Media Is Being Used For Insurance Investigations

Conclusion

Material misrepresentation can be a very serious offense. It can lead to charges of insurance fraud. It can lead to denied insurance claims and other issues. In many cases, drivers who committed serious misrepresentation on their insurance policy applications end up in prison.

In other cases, misrepresentation is a minor issue. You may have reported being insured for 10 continuous years when it was really 9 years, for example, because you mixed up your dates. In these situations, your insurance company will likely discover the error during the underwriting process, then quietly update your policy without major penalty.