6 Reasons Why You Should Never Lie to Your Car Insurance Company

Buying a car insurance policy is one of the smartest decisions that you can take for the safety of  your four wheeler. With car insurance, you have a guarantee of being covered against any loss or damages caused to your car in the event of an emergency. The best car insurance companies provide a range of add-on covers for you to purchase besides the regular third party cover and own damage cover. This is why it is important to compare car insurance plans before you buy one for your vehicle.

The concept of car insurance works on the leap of faith. As a car owner, you put your faith in your motor insurance company expecting them to provide you with financial assistance in case of an emergency involving your car. Similarly, the insurance company also puts their faith in you assuming that every information that you provide them at the time of policy purchase is correct and based on truth. If either of the parties lies about any piece of information, car insurance cannot work. Thus, you should always be honest with your insurance provider.

Common Lies Told by People to Car Insurance Companies

Although it is extremely important not to lie or hide any information from your car insurance company, still some people often do not tell the truth. Here are some of the things car owners commonly lie about to their motor insurance companies:

  • Condition of the Car

    Most people are not honest about the condition of their car while buying a vehicle insurance policy. They often lie about the age of their cars to lower the depreciation on their four wheeler’s value. Some people also tend to hide about any recent damages sustained by their cars while raising a claim or during the inspection. They specify old damage as part of the latest accident for which the claim is being raised.

  • Claim History

    Some people also lie about their car insurance claim history. Your claim history is important to build your No Claim Bonus (NCB) and to attract a lower premium on your comprehensive policy. Hence, people often hide about any claims made in the past and declare a claim-free car insurance record while renewing their policy or changing their insurer.

  • Usage of the Car

    A lot of people also lie about the usage of their cars while buying a policy from one of the best car insurance companies in India. There are separate insurance plans for cars used for private and commercial purposes. Private cars cannot be used for commercial or illegal purposes. However, some people use their private cars for unauthorized purposes and hide it from their motor insurance providers.

Why Do Car Owners Lie to Their Car Insurance Companies?

There can be multiple reasons behind someone lying to their motor insurers. Some may lie intentionally to earn a benefit from their insurer, others may lie unintentionally. Moreover, some people do not tell the truth out of sheer ignorance. Here are some of the common reasons why car owners lie to their car insurance providers:

    • To Get a Larger Claim Amount

      The most common reason for people lying to their car insurance providers is to get a larger claim amount. People hide about previous damages caused to their cars and label it as part of the damages resulting out of the current accident for which the claim has been raised. They do so with the hope of getting a larger claim amount that covers the cost of repairing both the previous as well as the latest damages.

    • To Lower Your Car Insurance Premium

      Another common reason for people lying to their motor insurance companies is to lower their premiums. The third party premium is fixed by the IRDAI and cannot be changed. However, the premium for a comprehensive car insurance plan is based on a variety of factors, such as make & model of the car, claim history, add-on covers, NCB, etc. The car insurance premium can get really expensive for people with luxury cars or with poor claim history. Hence, people lie to their insurance companies at the time of buying or renewing their car insurance policy in the hope of reducing their premiums.

    • To Get a Higher IDV

      The IDV or Insured Declared Value is the maximum claim amount that you can get in case of the total loss of your car. It is estimated by subtracting the depreciation in the car’s value from its current market value. As a result, people often lie about the actual age of your car to lower the depreciation applicable to the vehicle. This results in getting a higher IDV under their chosen car insurance plan.

    • To Buy Car Insurance Cover Despite Being Ineligible

      People also lie to their motor insurers to buy a cover that they are not eligible for. Some add-on covers are not available for older cars and so people lie to their insurers about the vehicle’s age to buy the cover. For instance, zero depreciation cover does not apply to cars older than 5 years. So people lie about the age of their cars to buy this add-on.

Read More: How to Calculate IDV for Car?

6 Reasons Why You Should Never Lie to Your Car Insurance Company

A car insurance policy is a legal contract between you and your insurance company. Being untruthful can lead to many unfavourable outcomes as well as legal consequences. Besides, it is completely unethical to lie when you share a professional relationship with someone. To get a clearer picture, take a look at what can happen if you lie to your car insurance provider:

  • Cancellation of Car Insurance Policy

    If you provide any false information while buying or renewing your car insurance policy, your insurer can cancel your policy when they discover the truth. This will happen because the details that you had entered in the proposal form is incorrect making the policy invalid. As a result, your car will be sans any insurance protection unless you buy another policy. Using an uninsured car can put you at the risk of inviting a penalty as it is illegal to drive a car without vehicle insurance.

  • Rejection of Claim

    Most car insurance companies inspect a car when a claim is raised to know the extent of the damages. The insurer sends a surveyor who carefully examines different parts of your car. If you had lied to your insurer previously about something or raised a claim for an uncovered risk, the surveyor will come to know the truth while inspecting your car. As a consequence, your insurer can reject your claim entirely and you will have to bear the cost of repairing the vehicle on your own.

  • Payment of Penalties

    If your insurer finds out any lies that you told about your car while buying or renewing car insurance, your insurer may levy a fine on penalty on you. You may be required to pay a fine to continue with your insurance coverage and prevent the insurer from lodging a legal complaint.

  • Legal Consequences  

    As mentioned earlier, car insurance is a legal contract between the motor insurance company and the car owner. Any breach in the terms of the contract can put you in legal troubles. The insurer can file a complaint against you for fraud or cheating. If proved, you may end up paying a hefty compensation or land yourself in prison for telling a major lie.

  • Increase in Car Insurance Premium

    Your car insurance premium is charged based on the information you provide to your motor insurance company. If you had lied to your insurer to reduce your car insurance premium, it will all go waste if your insurer finds out the truth. This is because the insurance company may charge a higher premium amount to buy or renew your car insurance policy.

  • Denial of Car Insurance in Future

    If your motor insurer finds out about the false information that you had provided while buying car insurance, they can cancel your policy on the accounts of fraud and manipulation. They may also blacklist you from getting any kind of insurance from the company in future. Moreover, a cancelled policy due to manipulation of information can make it difficult for you to get a car insurance policy from even the best car insurance companies in India.

Read More: Money Saving Tips for All Car Owners on Car Insurance

4 Things You Should Never Lie About to Your Car Insurer

Now you know what can happen if you lie to your car insurance provider. Take a moment to identify four things that you should lie about to your car insurer:

  • Never lie about the garage where your car is parked. Whether it is a network or a non-network garage, you should inform your insurer correctly to avoid rejection of your claim.
  • Never lie about who all drive the car in your house. You must inform your insurer about all those people who know how to drive a car even if they don’t drive regularly.
  • Never lie about your claim history. Your insurer will verify your claim history and therefore, you should not lie about your claim history to avoid cancellation of the policy.
  • Never lie about the discounts you don’t qualify for. Every car insurer will ask for proof to know if you qualify for a discount for real and thus, you should lie to them.

In a Nutshell

Being untruthful can land you into some major trouble. Instead of lying to save some money, you should make it a practice to compare car insurance plans before buying. Doing so will help you get your desired coverage from the best car insurance companies in India without being heavy on your pockets.

Written By: PolicyBazaar - Updated: 06 October 2020
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