The insured and the insurer share a fiduciary relationship that is premised on three main pillars of transparency, full disclosure, and complete trust. Buying car insurance and settling a claim involves a great deal of trust to be placed in the other party – it is a two-way street.
Telling lies during the time of purchase of the policy or during the car insurance claim process can lead to cancellation of the claim settlement as well as the policy itself; honesty is truly the best policy.
What are the Common Lies Told by Users?
Insurance companies have faced this situation of their policyholders lying to them time and again and some of the common misleading statements are as follows –
- Condition of the car, especially the age of the car to get a better deal with the insurance company. However, during the inspection of the car, the falseness of the information will be found out.
- Claim history can be misrepresented to show a clean history for the reduction of premium amounts.
- Usage of the car (for example, a car having private insurance is actually being used for commercial purposes).
What are the Reasons Behind Users Lying to the Insurance Company?
- In hope of getting a bigger claim amount, the policyholder might include previously occurred damages in the claim form. To illustrate, Sangeeta changed her insurance policy from a third-party liability policy to a comprehensive cover in the subsequent year. The reason being, with her previous policy, i.e. third-party, she wasn’t allowed to raise a claim to the damages caused to the engine and she came to know this later. Hence, it would be a breach of trust of the insurer and is an unfair claim to make. Thus, she chose to raise the claims under the comprehensive policy.
- To lower car insurance premiums in case of comprehensive or own damages insurance policies with add-ons.
- To get a higher Insured Declared Value (IDV) i.e. the market value of the car, one might lie. It can be in terms of downplaying the age of the car, the condition of the car, etc.
- To buy car insurance even if he/she is ineligible. This manipulation is to ensure that they circumvent the terms and conditions for existing policies to derive certain benefits that they are not entitled to. For example, manipulating the age of the car to avail certain add-ons.
Why Should You Never Lie to your Insurance Service Provider?
- Rejection of claim after the surveyor has ascertained that there is no truth to the claims made and the information provided is false and misleading. Just like what happened with Arush when he approached his insurance company for a claim and lied about the damages. Once the surveyor detected the damages, he found a false claim has been made by the policyholder. Hence, his claim was immediately rejected.
- Cancellation of policy might happen at very short notice leaving your car exposed to the hazards of the road for a period of time. In fact, you will not be able to use your car in the absence of a valid insurance policy in your name.
- Monetary penalties by the insurance company itself for having made false and misleading statements. The penalties will be levied as per the policy of the insurance company and can be a considerable sum of money.
- Legal consequences as a breach of contract by lying amount to cheating and fraud under the Indian Penal Code, 1860. If the insurance company wishes to pursue a case against the person playing fraud, the consequences are fines, prison term, or a combination of both.
- Increased premium prices if the insurance company decides to let you off lightly and not press any charges in the court of law.
- Denial of insurance in the future by not just the insurance company against whose policy you have made a false claim but also other insurance companies who would not wish to have a customer with such a terrible track record.
Please note that if there has been an honest mistake on your part, then take measures at the earliest to correct the wrong information that has been provided to the insurance company. The corrections made will then come in the form of an endorsement attached to the original policy.
Such changes will be realised only if the insurer is of the belief that the omission or change or modification was belatedly informed by virtue of an honest, bona fide mistake. The car insurance company will do a complete background check to ascertain this.
Instead of resorting to lying to one’s insurance company in order to lower the premium, or avail certain add-ons or discounts, one can use several other means at their disposal.
These ethical means of deriving maximum benefits from minimum cost requires some time investment on your behalf in terms of doing some research on the different options available and weighing the pros and cons against one another.
One such means that can be resorted to is the purchase of the motor insurance policy online as digital insurance companies offer numerous discounts and lower premium rates.