Cheap cover, costly consequences: 1 in 5 have lied on their car insurance application

According to a survey of 787 motorists by financial comparison site, Finder, 19%, or 1 in 5 Aussies, have lied on their car insurance application.

10% of respondents admitted lying about where their car is kept (the garage instead of the street); how much they drive their car was the second most common lie, followed by declaring additional drivers at 5%.

Other lies included a person’s occupation, being involved in a previous minor accident, age, previous claims or damage, how their car is used (personal or work), address, and previous offences/convictions, with 3% of respondents also admitting to putting their car insurance in someone else's name.

Young drivers are the most likely to have told a fib, with a whopping 37% of Gen Z admitting to telling tales. That’s compared to 29% of millennials, 14% of Gen X, and 5% of Baby Boomers.?

Peta Taylor, car insurance expert at Finder, said that while it may seem harmless, being dishonest on insurance applications can come back to haunt you.

“Omitting details in your application could be considered nondisclosure.?The consequences can range from having a claim denied to facing court for insurance fraud,” she told Carsales.

“It might seem like just a white lie to say your car isn’t parked on the street when it is, but the consequences can be serious,” she added, urging anyone who has been dishonest on insurance applications to fess up to their insurer sooner, rather than later as not doing so could be risky.

“It could mean your policy is made void, more expensive, or there may be no impact at all. Either way, coming clean is a must. Otherwise, you’re likely sitting on a worthless policy,” she said.

This new research comes months after Finder previously revealed that 16%, equivalent to 2.9 million Aussies, have cancelled or lowered their car insurance policies in the last 12 months as premiums and the cost-of-living soar.

Research also showed that car insurance premiums have increased by an average of 10.6% in the past 12 months and 19.8% since the beginning of 2021, rising faster than the overall rate of inflation.

While reducing or hitting pause on car insurance might seem like the smart way forward to mitigate this issue, like being dishonest on an insurance application, Tim Bennett, insurance expert at Finder warned that this decision can leave you financially exposed.

"Despite the strain, forgoing car insurance entirely leaves you financially exposed in case of accidents, thefts, flat tyres or even natural disasters," he said.

"An at-fault accident could be financially devastating depending on how much money you have in emergency savings. Consider exploring your options before kicking car insurance to the kerb.”

So, is there a smarter way forward with car insurance? Before reducing or stopping insurance altogether, or lying on insurance policies, Taylor said that investigating other insurance policies is the way to go, as there is no downside in doing so.

“We recently compared two comprehensive car insurance policies that share very similar features, yet are priced $245 apart,” Taylor said.

Additionally, she adds that when it comes to car insurance, loyalty doesn’t usually pay, with the best deals often aimed at new customers rather than existing ones.

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