It may seem like common sense… the more you drive your vehicle, the greater your chance of having an accident. And therefore, the higher your insurance premium would be.
But you’d be surprised how many consumers insist they only drive their vehicle 7,500 miles per year, or less. While there’s certainly a segment of drivers where this is true (retirees, stay-at-home parents, work-from-home employees, etc.), it doesn’t account for nearly 70% of drivers.
So insurance companies are starting to take a closer look at just how far you drive your vehicle. From tactics as simple as asking you to answer several questions on an application, to having you install a device in your vehicle to track all of your habits – how far you drive being one of them.
You didn’t really think that device was your insurance company handing you a discount on your auto insurance for nothing in return, did you?
What you need to know
First, you can get sideways with your insurance company because you haven't been upfront about how you’re using your vehicle.
Let’s look at an example: do you drive your car to work? If yes, you will pay more for auto insurance compared to someone that takes the bus or other mass transit. In fact, the further you have to drive to work, the more you’ll pay.
If you drive to work and tell your insurance company you don't, you have basically committed insurance fraud. Resist this common temptation, even if it will save you a few dollars.
Example. Say you have an accident on the way to work. Say also, that you have told your insurance company you don't drive to work. Your insurer could technically argue that it is not obligated to provide coverage. It is unlikely this will happen, but it could.
When you’re deceitful about how you use your vehicle, you've given your insurance company a good reason to consider your insurance policy void because the information you provided on the application, for which they determined your acceptability, was false.
This scenario is drastic, and not likely to happen because most insurance companies understand that vehicles are routinely driven to and from work. However, when this is the case, the insurance company charges a higher premium.
Honesty is the best policy when it comes to your insurance. Insurance fraud is a huge problem in this country. Claims are frequently padded with nonexistent damages. Accidents are staged. Injuries are faked.
Note. It is estimated that fraud accounts for as much as 25 to 30 cents of every auto insurance premium dollar. Think about that. If even half the auto insurance fraud in this country were wiped out in the next year, you would pay 12% to 15% less for your next policy.
Saving a few bucks every year by telling your insurance company that you don’t use your vehicle to drive to work, or lying about the number of miles you drive each year, is not worth the heartache you could experience if you had a claim that your insurance company denied.
If you’d like to learn more, contact one of our Licensed Advisors or complete the form on this page. We’re here to help.
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