There are many ways to invalidate your insurance, from misrepresenting yourself to the insurance company to letting an uninsured driver use your car. Take a look at 5 of the most common insurance foul-ups, and youâ€™ll see why such actions can cancel your policy or prevent a claim from being settled. Insurance companies must constantly protect themselves against fraud and other abuses, and will have very little tolerance for a customer trying to bilk them, either knowingly or not.
This occurs anytime you give the insurance company false or misleading information. Samples of misrepresentation might include claiming the car is parked in a garage at night, or lying about the estimated mileage you plan to put on the vehicle, especially if the vehicle is insured as a pleasure vehicle.
- Filing dishonest claims
Insurance companies pay millions of dollars a year in false claims or claims that are reported incorrectly to increase the potential gain. If you are caught filing a false claim, your insurance can be invalidated and you may be liable for severe legal penalties including large fines or incarceration.
- Fronting for high risk drivers
If you add someone else to your policy with the intention of getting cheaper rates than the person would normally pay, you may be guilty of fronting coverage, and that is against the law and insurance company policy. Each person is responsible for insuring their own vehicle, and the rates they pay are based on their driving records. Helping someone beat the system in this way could cause you to lose your insurance and you may have a difficult time finding replacement coverage.
- Unapproved drivers
Insurance companies have a right to know who will be driving a car that they insure. When you take out a car insurance policy you will be asked who the possible drivers of the car will be. If the car is later involved in an accident and someone other than an approved driver was at the wheel, you are in danger of having your car insurance invalidated.
- Letting your insurance expire
You are required by state law to carry insurance on any vehicle that is used on public roads. Additionally, many states require you to insure all registered vehicles, even those that are not currently being driven. Allowing your car insurance to lapse is a cause for canceling the coverage not to mention that it could result in your driver license or vehicle registration being revoked.