What are the consequences of lying on your auto insurance application?

This article has been updated from a previous version. 

We all fib from time to time, but when it comes to auto insurance, lying is a much more serious transgression.  

That’s because in order to find the best policy for their drivers and price them appropriately, insurance companies carefully weight different aspects of a customer’s driving history and vehicle – and there’s no detail too small when it comes to risk.   

What are examples of lying on your auto insurance application? 

Lying on your auto insurance application is known as misrepresentation or non-disclosure, and it can land you in a lot of trouble with your insurance provider.  

Some examples of misrepresentation or non-disclosure include:  

• Not informing your insurance provider that you use your vehicle for food deliveries or ride-sharing services 

• Not listing someone who regularly drives your vehicles as a secondary or occasional driver on your insurance application 

• Lying about past at-fault accidents and traffic tickets (your insurance provider will be able to find this information, anyway) 

• Lying about your mileage (e.g. how far you drive to and from work, in a given year) 

• Lying about your address (postal code is a big factor in determining rates) 

What are the consequences of lying on your auto insurance application?  

Falsifying information on your auto insurance application can lead to serious consequences. Here’s what you can face: 

You could face fraud charges 

Insurance fraud is no joke. In Canada, if you’re caught lying or deceiving your auto insurance provider, you could face criminal charges, and even wind up serving anywhere from two to 14 years in prison. 

There’s also the criminal record that you’ll now have, which will hold you back when applying for credit, jobs, housing, and so on. 

Related: The stealthy way insurance companies evaluate some claims: private investigators 

Your claims will be denied 

A less criminally serious consequence — but a financially burdensome one — of lying to your auto insurance company is that your claims could be denied. 

If your auto insurance provider finds discrepancies between what you indicated on your application and what they find out to be the truth, you risk having your claims denied, which means you would have to foot the bill for any damage.  

You’ll pay more for auto insurance 

Another risk you face by fudging information during the insurance application process is being charged higher premiums.  

If, for instance, you lied about your address in order to secure a lower rate, not only will you pay more for premiums if you live in a postal code with a high number of claims; you’ll pay more as a penalty for lying about your address in the first place.  

Additionally, this dishonesty can be recorded on your insurance history, potentially leading to higher premiums and difficulty obtaining coverage in the future. 

Read more: More than just fraud is keeping auto insurance expensive in Canada 

Your auto insurer could cancel your policy 

A more serious measure that your auto insurance provider could take if they find out you deliberately misrepresented or failed to disclose information is cancel your policy altogether.  

It’s one thing to cancel your own policy, but to have an auto insurance provider cancel on you will not look good on your record. Non-disclosure cancellations stay with you for three years, and it could result in higher premiums with the next insurance provider that decides to take you on (if they do). 

Other insurance providers won’t want you  

Once there’s a black mark on your record for non-disclosure, misrepresentation and/or cancellation, other auto insurance providers won’t be too jazzed to do business with you. 

In fact, they might outright deny you coverage because you’re now deemed “high risk.” That could mean you need to pay higher rates to be insured with a high-risk provider. Or, if you can’t get auto insurance at all, your only other option would be facility insurance, depending on the province you live in. 

Facility insurance is a type of auto insurance for drivers who can't get regular insurance because they're considered too risky. It's known as the "insurer of last resort" and costs a lot more than regular auto insurance. 

What if it was an innocent mistake? 

It’s entirely possible that you mistakenly filled out incorrect information on your auto insurance application. You may not have had all the information you needed at the time, which could have led you to make guesses about certain details. 

If that’s the case, you can explain this to your auto insurance company. It will be at their discretion whether to penalize you or consider it an honest mistake. If it was an honest mistake, chances are they won’t void your policy, but ultimately, it’s up to them. 

The best thing you can do is verify all the information you’re providing at the time of application to ensure it’s accurate. This way, they can’t come back to you saying it’s not. 

Honesty truly is the best policy, especially when it comes to your auto insurance application. The risks of providing false or incomplete information far outweigh any short-term benefits, and the consequences—ranging from denied claims to criminal charges—can have a lasting impact on your financial future.