| Around one in ten motorists lie to their insurance company when they buy their car insurance*, and although the magnitude of the lies vary, anyone who does lie runs the risk of having their insurance policy cancelled.
Leading insurer, Admiral has compiled a list of the five most common lies people tell when they take out a policy, and it is warning motorists to tell the truth or risk losing their cover.
Admiral managing director, Sharon Clarke, said: “Too many motorists think they can lie to get cheaper insurance. They think it doesn’t hurt anyone and it’s worth the risk, but in reality they are committing fraud. An insurance policy is a legal contract and we have a number of ways of finding out if people have lied to defraud us.”
The five most common lies motorists tell their insurers are:
- Withholding motoring convictions. This is by far the most common reason why policies are cancelled. People with motoring convictions tend to be bad drivers and so pay more for their insurance. If they have had a motoring conviction of any kind in the last five years, they must tell their insurer.
- Undisclosed modifications to the car. Modifying a car so it affects its performance or appearance means it is no longer a standard model, and therefore a different risk. Motorists must tell their insurer of any modifications either they or a previous owner has made to the car.
- Insuring a young person’s car in the name of an older driver. This is known as fronting and usually involves a parent insuring their child’s car. Young people are a higher risk for insurance companies because they have more accidents. The insurance must be told who will be the main driver.
- Withholding previous claims. Motorists must tell their insurer of any accidents or claims they have had in the previous three years. Even if the claim is settled or wasn’t their fault. The insurance company has a right to know their insurance history.
- Unacceptable licences. Some insurers will only insure someone with a certain type of licence. Admiral will only accept full licences from the EU and a few other countries. People with a provisional licence must tell the insurer and have a named driver with a full licence on their policy.
In some cases, insurance companies can find out someone has lied while they are making a claim, they then became liable for all the costs incurred in the claim themselves. So far this year, Admiral Group has cancelled 306 policies in this way because it has discovered the policyholder lied when they took out the policy.
Sharon Clarke, said: “Insurance companies have become much better at detecting fraud in recent years and have a number of tools at their disposal. It is the job of the underwriters to investigate policies and claims they are suspicious about. They check documents are authentic and if necessary instruct investigators.”
* estimated by the Motor Insurance Bureau.
Issue date: 28-11-05
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