If you’re thinking about lying to your insurance agent, think again. A little white lie can cost you a lot of money. Leaving out information can get you in trouble — it may even be considered insurance fraud!
Why do people lie to insurance agents?
People lie to their insurance agents because they want to get more out of their policy. Let’s take a look at some of the reasons why someone might lie when applying for first-time homeowners insurance:
- They want to save money on their premiums. According to Bankrate, the average cost of homeowners insurance in the U.S. is $109 per month. Home insurance is a high-priced expense, hence, every dollar saved counts. That’s why people omit information that could raise their premium rates.
- They want to get more money in a claim. Let’s say your TV was damaged during a flood. If you claim that your TV was worth $500 when it was actually worth $300, you’re at risk of insurance fraud. When making a claim, you should never exaggerate your losses — remember, insurance fraud is a crime that’s punishable by imprisonment and a $50,000 fine.
- They want to get insurance even when they’re not eligible. Insurance companies usually deem a person’s property as “uninsurable” if there is too much risk involved. This includes homes that require extensive repairs or are uninhabitable. If you’re having a hard time getting insured, contact one of Luxury Property Care’s property managers.
What common lies do homeowners tell when applying for insurance?
Misrepresentation is when a person lies or omits information when they apply for insurance. There are two types of misrepresentation: hard misrepresentation and soft misrepresentation.
Hard misrepresentation is when the homeowner stages an accident for financial gain. For instance, the homeowner might intentionally destroy the home, burn it down, and so on. Soft misrepresentation, on the other hand, is when the homeowner exaggerates their loss. For example, if they lose a $1,000 laptop but file an insurance claim for $1,500, that is considered soft misrepresentation.
Let’s take a look at some of the common home insurance lies that homeowners tell:
#1 Whether they have a swimming pool
Properties that have swimming pools are considered high-risk. This is because there are thousands of pool-related injuries each year. According to the U.S. Consumer Product Safety Commission, around 4,900 people suffered injuries in swimming pools each year from 2011 to 2013.
Your home insurance policy will cover you for pool-related injuries, however, your liability coverage may not be sufficient to cover the costs of legal fees, damages, and medical bills. You may have to purchase additional coverage amounting to $300,000 or more.
#2 Whether they have a trampoline
Insurance companies take issue with trampolines because they increase the liability risk. Keep in mind that there are around 100,000 trampoline-related injuries each year.
If someone were to be injured on your trampoline, as the homeowner, you will be held liable. Your home insurance policy may protect you, but again, it may not be enough. You’ll need to increase your liability coverage or get an umbrella policy.
You may also make your trampoline less dangerous by building a fence around it. This can help lower the cost of your premiums. Consider hiring a property management company that has a vetted list of vendors that can complete the project at a reasonable price.
#3 Whether they have a “dangerous” dog breed
“Dangerous” dog breeds include Rottweilers, German Shepherds, Doberman Pinschers, Akitas, Pitbulls, and more. City ordinances may also prevent people from owning specific dog breeds.
Your insurance company may not insure you if you have a “dangerous” dog, but this isn’t a reason to lie. Stating that you don’t have a dangerous dog when you actually do may result in the cancellation of your insurance contract.
#4 Whether they’re renting out the home
Homeowners insurance protects your primary residence. It assumes that you’re using the home as a home. Hence, if you rent it out, use it for business, or turn it into a short-term rental like Airbnb, your home insurance policy may be canceled. As a homeowner, you are expected to fully understand and abide by the terms and conditions of your insurance contract.
What are the consequences of lying to your home insurance agent?
It’s best not to lie in the first place. Here are the common consequences of lying to your insurance agent:
#1 Cancelled Policy
If you lie or withhold information from your insurance agent, your insurance policy could be canceled. What’s more, you could be considered high-risk, preventing you from applying for insurance in the future.
#2 Higher Premiums
Your insurance company could increase your premiums if they catch you lying in your application. But that’s not all — if you decide to look for another insurance company, they will know what you’ve done. It will be difficult to find an insurance company that will not charge your higher premiums.
#3 Criminal Penalties
If those two aren’t enough to discourage you from lying to your insurance agent, perhaps being charged with insurance fraud might be! Remember, insurance fraud is a felony under the Criminal Code. It is punishable by imprisonment and a fine of up to $50,000.
How can you get better insurance prices without lying?
You don’t have to lie to get better prices on your homeowners insurance. If you aren’t happy with your premiums, you should speak to your insurance agent to find out how your rate can be reduced. There are several ways to save money on your premiums, such as securing your home, improving your credit score, raising your deductible, and more.
You may also be able to negotiate better prices by hiring a property management company like Luxury Property Care. Our property managers personally know some of the top insurance companies in South Florida. We’ll help you find the ideal insurance policy for your home and negotiate prices on your behalf.