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Insurance company may deny claim based on false application

It’s just a little fib, and many in New York feel certain no one will ever know. If the misinformation on an application for auto insurance saves the driver money, what harm can it do? In fact, about 10 percent of those applying for insurance reportedly lie on their applications — such as saying their cars have lower mileage or are only driven for pleasure — to get a lower rate believing the insurance company will never find out. However, improved technology is making it more likely that those fibs will come to light.

Intentionally misrepresenting information on an application for car insurance is fraud. Insurance companies use the information on applications to weigh the applicant’s risk, which determines the amount one may pay for coverage. Details supplied on an application are carefully cross-checked against databases and catalogues of information regarding accident claims and other factors. If the information found on the databases contradicts the answers on an application, the insurer has the right to deny the application.

However, even if a falsified application is accepted, chances are good that the truth will come out if the insured driver ever files a claim. In such cases, an insurance company may deny the claim or at least cover only part of the claim. In cases of extreme fraud, the insurance company may cancel a fraudulent policy or even involve authorities, potentially resulting in legal consequences.

When a New York driver files a claim with the insurance company, he or she expects satisfaction fast and may resist when the claim is denied. Depending on the circumstances, a denied claim may be the result of a fraudulent application. Insurance companies facing accusations of wrongful denials or bad faith are often portrayed as the bad guys. However, with the right support and representation, such accusations can be defended against in civil court.

Source: CNBC, “Liar, liar: Here’s what drivers fib about when applying for auto insurance“, Kelli B. Grant, Accessed on July 15, 2017

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