Online Auto Insurance Cautions Consumers about Material Misrepresentation

The writers at OnlineAutoInsurance.com have published a new FAQ explaining what "material misrepresentation" is and why consumers should double-check to make sure that they're not making any misstatements when applying for a new policy.

Material misrepresentation, according to the FAQ, is purposefully lying about personal details when buying coverage in order to get a lower rate.

This most frequently happens when people who should be buying high risk auto insurance are trying to bring their costs down, but it can be committed by anyone just trying to get cheaper coverage at their insurer's expense.

According to rating information company Quality Planning, auto insurers lost an estimated $15.4 billion in premiums in 2010 because of both intentional and accidental rating errors, a big motivator for eliminating the practice.

Quality planning estimated in a 2011 report that coverage providers missed out on $2.7 billion in premiums because of policyholders' not reporting other motorists that would be driving the insured car, $2 billion because of previous accidents and violations that weren't reported, and $1.4 billion because of policyholders' providing insurers with a false garaging address.

This last example of material misrepresentation-lying about where you keep your car-may seem innocuous enough to the average driver. But where a person lives plays a big part in determining how much a policy is going to cost, and there are serious consequences for lying to your insurer about this and most other factors.

According to Massachusetts regulators, an insurance company can deny a policyholder's claim if it turns out that they supplied false information about where they keep their vehicle.

Source: http://www.mass.gov/ocabr/consumer/insurance/auto-insurance/faq.html#q7

This generally only applies to optional coverages that pay for the policyholder's own damages and repairs, but it still means that policyholders could have their coverage completely voided-no matter how long they had been paying for it-just because they wanted to save a couple extra bucks on a premium.

Coverage denials for material misrepresentation don't apply only to territorial rating. They'll happen in any case where policyholders lie in order to portray themselves as less of a risk, and the consequences are similar in most states.

For more on this and other car insurance issues, go to http://www.onlineautoinsurance.com/high-risk/ to get access to informative resource pages and an easy-to-use quote-comparison generator.

To access the material misrepresentation FAQ, follow the "Questions" link located at the top of any page on the site.