Do auto insurance companies check where you live?

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Things to remember...

  • Providing a false address on an auto insurance application could lead to criminal and civil penalties
  • An inaccurate application frequently serves as the basis for an auto insurance company to void an insurance claim
  • Comparison shopping is a better way to acquire less-costly insurance than to undermine an application with false information

When you apply for auto insurance, you start by answering a series of questions in order to receive an accurate quote.

Comparing several quotes prior to choosing an auto insurance policy is always a good idea. Being honest when answering all the questions is also a good idea.

At some point, filing a claim on the policy may be necessary. If it turns out you were dishonest, certain consequences may result.

Those consequences could reach the level of criminal insurance fraud. Not telling the truth about your address and residence is one of those “little things” that can get someone into a lot of trouble.

Compare car insurance quotes right here by entering your zip code above.

The Setting of Insurance Rates

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Insurance companies take a number of things into consideration when arriving at an insurance rate. Underwriters closely examine the following information:

The applicant’s address is important to an insurance underwriter.

A person living in a very congested metropolitan area generally faces more risk when driving. Many people and cars crowd the streets in populated areas, which means the chances of an accident involving other cars and pedestrians increase.

A driver who lives in a densely populated rural area does not automatically avoid risk, but the possibilities of an accident — or theft, or vandalism — decrease.

Fewer people and less congestion mean less likelihood of a problem. Therefore, insurance rates are typically less expensive. That said, other personal factors could drive such a resident’s rates up.

A person living in a metropolitan area may come up with the brainy idea of using a rural address to cut down on auto insurance costs. Being dishonest about your residence is never a good plan. Amazingly, some people do this to pay less money on their policy.

In one of the more outrageous examples, some may even misrepresent the state in which they reside.

The state of New Jersey has finally dealt with instances of reverse rate evasion, a scheme in which people claim to be residents of a different state and procure auto insurance from that state. Reverse rate evasion is now a crime in the Garden State.

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Criminal Matters

Any person that is not honest about their residence on insurance documentation could face criminal charges.

In Pennsylvania, anyone making false statements on an insurance application may be guilty of misdemeanor misrepresentation. Filing an insurance claim based on any lies could constitute felony fraud in the state of Texas.

The criminal charges might not be the only sanctions a person ends up facing. He or she might face a civil suit.

If the insurance company pays out money under misrepresented or fraudulent pretenses, the insurance provider could be able to sue to recover the losses plus damages.

And yes, an insurance company reserves the right to cancel the policy of a dishonest customer.

Avoiding Detection Is Not Always Possible

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Insurance companies can and do investigate suspicious activity. If an investigator from the insurance company makes a visit to the property and, on several occasions, notes no policyholder or car is anywhere in sight, the policyholder may have some explaining to do.

There are things that raise flags with auto insurance providers. For example, why would someone who claims to live in one state file three claims in another state? A cursory investigation may end up revealing the truth.

A Major Claim Denial

Contracts procured under false pretenses run the risk of not being honored. Incredibly serious consequences often derive from the denial of a claim due to a fraudulent application.

A driver who causes a terrible accident and inflicts serious injuries on others finds him/herself heavily reliant on the $500,000 in purchased liability coverage to protect him or her from incredible financial losses.

A policy voided due to fraud creates a major financial and legal problem. A levied civil judgment is going to dramatically dwarf a few petty dollars saved by misrepresenting an address.

A better way of finding reasonable and less costly premiums entails comparison shopping for competitive policies. Compare today by entering your zip code into our free rate tool below.

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