Whether or not you think this is fair, where you live has tangible effects in some industries — including auto insurance. But it’s not because of any perceived status of a policyholder. Since addresses are often used as a determinant for auto insurance rates, two drivers with identical ages, vehicles, and driving records could pay drastically different premiums if they have different ZIP codes.
Which sometimes leads to some drivers lying about his or her address on an auto insurance application in order to secure a better quote.
Lying in Detroit
This has been observed most recently in and around Detroit, Michigan. Because Detroit has high auto theft rates (and partially because Michigan’s auto insurance laws result in costlier payouts to claimants), coverage for drivers within Detroit city limits costs substantially more than for people who reside in the city’s suburbs. One analysis revealed that a middle-aged owner of a safe car who possesses a good driving record can pay around $4,500 a year for auto insurance in Detroit — but that figure drops by over 50% in many of the surrounding suburbs.
This consequence of this disparity leads many drivers who live in Detroit to set up an address — often with a post office box — which can be used solely to renew their auto insurance. So even if someone spends a few hundred dollars a year on a P.O. box, they’re still paying less than they would be if they were truthful on their auto insurance application.
Which begs the question: is this practice just a little white lie, or is it a bad idea?
What Happens if You Get Caught Lying to Your Auto Insurance Company
While lying about your address on an auto insurance form isn’t a crime, it can have serious consequences if you are found out (and companies have ways of finding out). Insurance companies call this “material misrepresentation of the risk,” which is more commonly referred to as fraud. And if your insurer discovers the inconsistency, it has the right to cancel your policy and/or refuse to pay a claim if you are involved in an auto accident. Furthermore, if/when you start looking elsewhere for auto coverage, the “news” of your fraud will be made available to other insurers, and you’ll likely either be denied coverage or pay higher premiums.
The Truth Will Set You Free
So the takeaway from this story is clear: don’t lie about your address on your auto insurance application to get a cheaper quote. There are plenty of other ways to legally reduce the amount you pay for coverage using discounts, policy tweaks, and other methods. For more information on these options, contact Auto Insurance Specialists. They have a long track record of finding affordable auto insurance coverage for customers, without anyone having to tell a lie!
This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverage’s in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.