I want to lie to my insurer

Can I get away with it? What will happen if I try to claim? Emma Lunn helps one lovemoney.com reader find out whether lying to your insurer can ever pay off.

What happens if you lie to your insurer?

One lovemoney.com reader, Brokeasbrokecanbe , recently posed this very question to the lovemoney.com community on our Q&A tool recently (read the original question in full here).

Brokeasbrokecanbe wanted to know what would happen to someone who had previously been banned from driving and had points on their license - but they'd deliberately omitted these details when they'd applied for car insurance. Hence they'd been sold a policy, probably at a decent price.

So Brokeasbrokecanbe wanted to know: what would happen if this driver cancelled the policy, switched insurers and came clean to their new insurer about their driving history? Would the information shared between insurers show they'd lied when taking out the previous policy? Would this mean they'd be turned down for the new policy or - worse - prosecuted for insurance fraud?

Lying or withholding facts

Not owning up to something when you apply for insurance is known as "non-disclosure". Because insurers calculate premiums based on the information you give them, withholding certain facts could lead to a cheaper premium. It may sound worth the risk but it rarely is. If you make a claim and the insurer finds out you've withheld information - or told a downright lie- your claim is likely to be turned down. Worse still, you could be prosecuted for fraud.

Don't think you're safe just because you got insurance in the first place. Insurers tend to check that the information they've been given is true when a claim is made, rather than when insurance is taken out. My colleague Jane Baker tells a cautionary tale about not declaring unspent convictions to your insurer in this article.


Lying to your insurer isn't just a little white lie, it's fraud and it's serious. And you are unlikely to get away it. Insurers are detecting record levels of fraudulent insurance claims - 2,000 every week, worth £14 million - according to the Association of British Insurers (ABI). Its research found one in five people would still be tempted to cheat on their insurance, despite the likelihood of being caught, facing trouble in obtaining financial products in the future, and getting a criminal record.

That means one in five of us are pretty stupid, indeed!

Getting found out

Let's look more specifically at car insurance, seeing as that's what Brokeasbrokecanbe was concerned about. The AA says the number of claims refused after drivers failed to disclose key facts is on the increase, and went up 30% in just six months this year. It estimates that fraud now adds around £30 to every car insurance policy, with honest customers effectively subsidising fraudsters by this amount.

The main reasons for the upsurge in refused claims are:

  • undisclosed convictions,
  • fronting (lying about who is the main driver),
  • failure to tell the insurer about previous claims or modifications to the car, and
  • lying about the address where the car is kept.

The AA cited an example of a claim that was turned down due to fronting.  A man took out insurance on a car he claimed was his own, but which in fact belonged to his son and his son was the main driver. This meant the premiums were lower than if the son took out insurance in his own name.

The son had an accident and the car was a write off.  However, when he made a claim the insurer discovered the "fronting" fraud. It declared the policy void and refused to deal with the claim, leaving the owner with no compensation for the loss of his car.

Also, as another car was involved in the accident, the insurer still had to deal with the third party's claim. Therefore the policyholder still had to pay the full premium and depending on the third party claim costs, the insurer could also approach the policyholder to recover some of these costs.

The man will now have to tell any future insurers that he has had a policy declared void - meaning many will not provide cover, and any that do may charge a much higher premium.

The AA says getting caught for fronting cost this policyholder more than £12,000 and he'll face higher premiums in the future too.

Coming clean

Going back to the original question asked by Brokeasbrokecanbe, will telling a new insurer the truth would land you in trouble for lying to the old one?

To find out what would happen in this situation I asked around a few insurance companies including Lloyds TSB, esure and Swiftcover. The responses were surprising: basically as long as he told the whole truth to the new insurance company it would be unlikely they'd be any comeback for lying to the old one. Although insurers share information they would be unlikely to compare notes on the contents of an application form - although they do share information on claims and instances of policies being cancelled or voided, or insurance being declined.

However if they did find out the driver had lied to his previous insurer, any new insurer would be unlikely to look too kindly on it. They might refuse to insure him or charge him more for insurance.

The moral of this story is, don't risk lying to your insurer to bring down your premiums. If you ever want to come clean, you won't be able to do so. And if you ever need to make a claim, again, you won't be able to do so - unless you want to end up behind bars.

There are far better ways to cut your car insurance costs. Adopt our goals Slash your insurance costs and cut your car costs to learn how and watch our video on beating car insurance renewal quotes.

Compare car insurance at lovemoney.com


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