Customers Caught Lying

Lying on an insurance application can be an expensive mistake. And yet, it's one plenty of people make. A new survey of more than 3,000 consumers from insurance marketplace - found that 51 percent of auto insurance applicants don't tell the truth. Men and women are equally likely to provide incorrect information, the site found, while millennials are more likely to lie than Gen Xers or baby boomers.

Some people are trying to pull a fast one by omitting mentions of recent tickets or accidents, but other inaccuracies stem from guesswork during the application process. Shoppers don't know the trim package on their vehicle, aren't sure how many miles they drive in a given year, or don't remember when they got that speeding ticket — and they don't double-check before submitting their application.

Whatever your intent, providing incorrect information for any kind of insurance is likely to catch up with you. "The truth always comes to the surface,". Often, insurers root out mistakes early on. In the course of processing your application, they check details you provide against those in a centralized database of claims and applications - among others, there's the Medical Information Bureau for health and life insurance, and C.L.U.E. for home and auto claims. Both offer consumers a free copy of their record.

At a minimum, that would mean higher rates to reflect the correct details, or a denied application. But it could be even scarier, particularly if you intentionally lied to get a better rate.

Don't breathe a sigh of relief if your application was approved. Misrepresentations can come back to bite you down the line if they are relevant to a claim. Typically, what would happen is, your insurance would be void. You won't be covered. Or the policy may pay out less than expected.

Depending on the state and type of insurance, there can be a limit to how long insurers have to spot a problem. With life and disability insurance, for example, they generally have two years to investigate and rescind a policy, said Kochenburger. After that, even if there's a misrepresentation, the insurance company can't often do anything about it.