Big Lies Told to Auto Insurance Companies

A recently released report from Quality Planning Corp in San Francisco shows that auto insurance companies lost about $15.9 billion in 2008 from premium leakage. Premium leakage is the loss of revenue because of the inability of insurance companies to keep track of their customers’ situations that influence rates. This number is about 10% of the total $167 billion in personal auto premiums written. This is according to the article “The 5 Biggest Lies Told to Car Insurance Companies” by Barbara Marquand on insure.com.

Lying about small information to get a better auto insurance quote may seem harmless but it could mean trouble for you down the road. Some of the lies told to insurers include under-estimating the number of miles driven, not reporting all the drivers in the household, not giving the correct garage location, claiming discounts that no longer apply, and misstating how the car is used.

You should avoid misstating information when getting your auto insurance quote, not only because it increases rates for everyone over time, but the insurance company could very well find out. According to Quality Planning every 1% reduction in rating error can cause a 20% profit gain. This means that it’s worth the insurer’s time to do their homework and ensure their customers are being honest. The information you give them may end up getting scrutinized so safe yourself the trouble and just be upfront from the start.

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