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Have you lied to your insurer?

By Sarah Modlock

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Somebody's pants are on fire. Yours? Telling what seem like harmless white lies to an insurer could result in your being uninsured. But that doesn't stop people doing it. More than 2.5 million motorists in the UK could find themselves with an
invalid insurance policy by providing inaccurate information during the application process.

One in ten drivers have provided inaccurate crucial information such as their age, address, no claims bonus, and previous driving convictions in an attempt to save money on the cost of their car insurance say uSwitch.com, who conducted the research. Six out of ten drivers use their car for at least part of their journey to work, yet up to two-fifths do not have sufficient cover for the commute as they have only opted for just 'social, domestic and pleasure' cover, not commuting.

There does seem to be a great deal of confusion amongst drivers around the issue of commuting which, for most insurers, means driving all the way to work or driving to the station, leaving your car and continuing your journey by train. One reason insurers need to know if you use your car for commuting is that by leaving your car in a public place it is at greater risk from theft or damage.

Other classic tricks to lower the cost of the premium include fibbing about the person who is the main driver or their age. Claiming to live in a better area than you do; giving a friend or relative's address is also common, as is moving house and getting your mail forwarded without updating your insurer.

What else? Saying you have off-street parking when you don't (or don't actually use it) is a favourite. The same goes for garages, with most usually full of tools and junk, rather than cars. Playing up the length of your no-claims, playing down the engine size and fibbing about any modifications to the car (there certainly seem to be a lot of big spoilers and souped-up engines around) also make a difference.

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Worth the risk?

It is increasingly common for people to lie about previous or existing convictions for drink driving or speeding. What's interesting about this is that some people who have had clean licences for perhaps 15 or 20 years may genuinely not know that they have to alert their insurer when they get their first endorsement for speeding. I know it sounds incredible but a friend of mine who got his first points after 20 years on the road had no idea he was supposed to 'fess up and would probably face increased premiums for a while. He was just about to get in touch with his insurer when the police contacted him to tell him the speed camera evidence was being questioned and the points would be probably be taken off if he appealed. Dumb luck, I think it's called.

Of the 15% of drivers who said that they had knowingly provided inaccurate information to their insurer regarding the use of their car, over three quarters told uSwitch they were prepared to take a risk, and did so in the knowledge that it could impact on the validity of their car insurance. Of those who were aware of the consequences, one in ten said they did it to keep the cost of their cover down. Over a third of people claim that it was a genuine mistake and 16% said that they didn't understand the questions in the application. Surprised? I'm not. You only have to look at the way some people drive to get an idea for how likely they are to cheat an insurer or struggle with paperwork. But if their loved ones were left with a damaged car or much worse, after a collision with a driver 'who was prepared to take the risk', how would they feel?

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The £1,636 lesson

"With many consumers seeing car insurance as a grudge purchase, it's no great surprise to see people either withhold or knowingly provide inaccurate, crucial information in order to get cheaper cover," says uSwitch's Aron Thompson. "In reality, it could end up teaching the driver a costly lesson, on average £1,636, as the provider is under no obligation to settle a claim based on a policy which is inaccurate." He advises drivers to "...check, check and double check that you are submitting the correct details to your insurance provider. Regardless of the saving, it isn't worth the risk. Remember, if you already have a car insurance policy and your details change you are obligated to inform your insurer of any changes (such as a change in address). Driving without a valid insurance policy is a hazard to both the driver and everyone else on the road. We already have 6% of vehicles on the road totally uninsured, with a further 10% of drivers with potentially invalid car insurance this presents a serious issue for the industry and consumers alike."

Uninsured drivers added £30 a year on average to the premiums of honest motorists in the last year according to the Association of British Insurers. A fund set up by the Motor Insurance Bureau and financed by all UK insurance companies to compensate the victims of uninsured drivers paid out £500m last year. "It is understandable that people have questions [about insurance], but all they have to do is ask," says the ABI's Malcolm Tarling. "The key to this is, play fair by insurers and they will play fair by you. If in doubt, disclose."

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It's not just car insurance where fibs can make a difference. The secret spending that we hide from our partners ratchets up the value of home contents and nationally, this equates to a massive £6.5 billion annual deficit between the actual and the reported costs of purchases, according to Halifax Home Insurance. "Men and women are divided when it comes to their secret spending or 'buy now, lie later' habit," says Vicky Emmott of the Halifax. "While women return from shopping trips pretending they have secured a bargain price for their Manolos and Jimmy Choos, men hide the price of stereos and plasma televisions. Because of this, householders could find the contents in their home are underinsured if the person responsible for organising the policy is unaware of the true cost of items in the property. The answer could be unlimited contents insurance but they will have to own up to the real cost of the items when claiming on their insurance policy."

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