Simple mistakes or willful omission of required information for your insurance policy can end up costing you more money in premiums down the road, or company cancellation of your insurance policy altogether. Insurance companies ask specific questions to complete the underwriting process to accurately rate your policy each year and pay out claims accordingly. Insurance consumers are growing increasingly frustrated with higher premiums and lack of settlement for claims, but denying the insurance company the truth to save money can be an expensive and illegal mistake. Are you guilty of these simple mistakes?
1. Flubbing the Truth
This can be interpreted in many ways and everyone can find a reason to leave out portions of the truth. You may fib about your use of a recreational substance when you apply for your life or health insurance policy or leave out claim and violation information on your insurance policy. No matter how small the omission, the company can come back and charge you for it later if they find out, or refuse to pay a claim.
2. Undisclosed Drivers
Drivers in your household with access to your vehicles need to be disclosed on the application or to your current insurance company. If the driver gets into an accident, you will be required to add them anyway – with a surcharge.
3. Driving More Miles (if your policy is rated for pleasure or short annual mileage use)
Insurance companies offer discounts for short annual mileage. If you are retired, work from home or carpool, chances are you are eligible for the reduction in premium. If you are receiving the discount and you drive more than the allowed miles, you will end up paying a higher premium when the company discovers the inconsistency.
4. Using a Different Address
Rates are determined by the location where you RESIDE. If you use an alternative address, you can be subjected to a claims review. Insurance rates differ from city to city and each state has their own rules and regulations. Make sure you tell your company if you move to ensure you are covered.
5. Adding People to Your Policy Who Don’t Reside With You
You can’t extend coverage to people and their belongings if they don’t live with you.
6. Making Claims for Willful and Intentional Damage
Willful damage to your vehicle, your home and yourself can’t be claimed for insurance.
7. You Don’t Disclose Recent Violations
Recent violations can affect your auto insurance premiums and life and health eligibility. Failure to disclose violations can result in underwriting cancellations or denial of coverage when you apply.
8. You Fail to Comply with Underwriting Requests and Requirements
Underwriting requests and requirements are very important to your insurance company. They use them as a tool to re-underwrite your policy to determine risk and prevent future claims. If you fail to comply with their requests or distort the truth about your compliance, you can face cancellation or denial of future claims.
Insurance companies are serious about their business practices regarding rates, claims and preventing loss. Each company has a special team behind the scenes to make sure their clients are compliant, honest and acceptable risks for coverage. If the insurance company feels you are undesirable or willfully dishonest they will cancel your insurance and in some cases, they will bring charges against you. It’s best to be honest and pay what is due to prevent higher premiums and unexpected surcharges in the future.