We’ve all heard that “little white lies” are harmless, but when it comes to parents and auto insurance, they could spell “big” trouble. Although, some parents feel that it’s okay to lie to their auto insurance company about their teen drivers in order to obtain coverage or to save a few dollars on their otherwise skyrocketing premiums, the consequences of saving those dollars could put them in a very risky position.
To make the point a bit clearer, according to the industry’s new research, thousands of parents are committing auto insurance fraud by falsely claiming to be the primary driver of a vehicle that is, in reality, being mainly driven by their student son or daughter. A ratio of one in six parents are suspected of being less than truthful with their insurer so their kids can be covered or for them to keep more money in their wallet.
The old saying of “everyone does it” isn’t much of a defense should your auto insurance company catch on. As a result of the study, it was found that as much as 16 percent of young drivers are lowering their auto insurance costs by pretending to not be the primary driver of the car they’re driving. With that in mind, if the young driver is involved in an automobile accident in a distant location, such as an out-of-state college or university that the insurer can prove is the student’s actual residence, the policyholder, generally mom and dad, could face considerable difficulties.
It’s somewhat understandable that well-meaning parents want to help their student sons and daughters obtain auto insurance or for themselves save money on higher premiums by putting the teens on their policy, but insurance companies frown on the practice known as “fronting”. And, by law, it’s illegal. So, if you, as a parent, claim to be the primary driver of a vehicle that is primarily driven by a high risk individual within that age group, such as your child…you are guilty of fronting.
Once your auto insurance company spots some red flags that fronting may be going on, your problems may be just beginning, as this type of fraud usually comes with some very serious legal and financial consequences. If insurers discover or even suspect this was occurring, by all rights, they are permitted to refuse to pay for a claim, if one is filed due to an accident involving your child. They can also decide to settle a third party claim in order to recover their costs from the parent policyholder.
Furthermore, in case the auto insurance company follows through with a payout on a claim, the young driver could be judged as “uninsured” and face substantial fines for fraudulently obtaining coverage. In addition, they could even be subject to a driving ban…not to mention be prosecuted. This would hold true for the parents as well – who could also have their insurance coverage cancelled on top of everything else.
While telling a few “white lies” might seem, on the surface, as a good idea, remember this – most lies have consequences…and, are you willing to take the risk, knowing what you know now?
One thing you definitely want to know…is that you’re getting the best rate on your auto insurance. Why not get a free auto insurance quote today?
Do you think honesty is the best “policy” when it comes to your auto insurance company? Feel free to share your thoughts in the comments section below.