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Why is it important to be honest with your insurer?

Honesty is always the best policy! Turns out it is also very important for your insurance policy!

Most car owners are misled into thinking that insurance providers are always looking for ways to avoid paying out car insurance claims. However, this is far from the truth. In fact, all insurance companies are willing to pay every claimant - with the only clause being that the claims are valid as the claims raised. No insurer would want to upset a customer especially those who have had a long-term relationship with them. Hence, just like all financial products, it is very important that you are honest and transparent with your car insurance provider.

Full Disclosure Versus Partial Disclosure

One of the most common issues of dispute between car insurance customers and insurers would be the non-disclosure or partial disclosure of information on the part of the policyholder. Unfortunately this may only come to light during the time of a claim, and it could ultimately lead to the rejection of the claim. (This obviously works against the customer and is a lose-lose proposition for all!)

  • When an individual buys a car insurance policy the insurers first step is to assess his/her risk based on the all information provided. The insurance coverage is offered at a premium that corresponds to this risk. So if the customer has not made a full disclosure at the time of policy purchase, his/her risk assessment would not have been accurate. This works against the policyholder as when the insurance company identifies this in the event of a claim, the claim can be rejected.
  • In some extreme cases or instances, partial disclosure or false information may lead to car insurance cancellation on the valid grounds of non-disclosure or partial disclosure. Following this, the car can even become uninsurable with the same insurance provider. (In other words, you can get blacklisted with that particular insurance provider)
  • If the insurance company asks for information about your driving history, you should be very honest in this matter, if you have experienced any sort of accident it’s best to be transparent about it rather than have the insurance company find out later.
  • If you are using a vehicle that will be used for commercial purposes, it is doubly important that accurate information is disclosed to the insurer and has to apply for and buy the appropriate motor insurance policy. This way, the claims process in the future will be quicker and will conclude easily without causing undue stress to all concerned parties.

Car Insurance Fraud:

If your car gets stolen, the first thing to do is to raise a claim under your insurance policy. The next step is to file an FIR so that the police can aid you in locating the missing vehicle. When you are reporting the incident to the insurance company, it is crucial that you reveal the truth. You should be honest with details such as the following:

  • The location where the vehicle was parked
  • The details of when it was last seen
  • The details of who was last driving the vehicle. If it was a driver all the details about him/her.
  • The use of the car (whether private or commercial)
  • The Insured Declared Value (IDV) of the vehicle
  • The authenticity of the theft claim

You should bear in mind that honesty is, in fact, the best policy in the realm of car insurance as well. Any type of fraudulent claim is viewed very seriously in the industry. Being dishonest with the insurance provider will not only affect your future premiums but you will pose issues when you apply for insurance from another provider!

Dishonesty or even withholding information while reporting a loss to the insurance company is one of the main reasons for rejection. If you want to save money on car insurance, be upfront with the insurer; research the companies that offer the best rates for extensive coverage, and ask if there are discounts or offers that you could opt for. The aim of insurance is to help you financially at the time of an unprecedented event that will cause or result in losses. Being honest with your insurance company will ensure that your claim will be paid out without any hassles or any sort of irritation.

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