About UK Insurance
Fudging facts about
car insurance applications can lead you from white lies to serving
hard time in prison. Revenue loss, or premium leakage, happens when
insurers are unable to keep up with policyholder facts that can
change premium costs. In the U.S. auto insurance leakage totaled
$15.9 billion in 2008, or 10% of $167 billion in premiums (Quality
Planning Corp.). Whether in the U.S. or the
UK, fudging facts about UK
insurance can garner more scrutiny than drivers bargained for.
Fudge-prone areas that may trigger insurer's closer scrutiny.
1. Low balling mileage estimations.
Low-balling mileage is a frequent rate factor about which
policyholders are dishonest. People may spread the fudge this
deliberately, inadvertently or because of ignorance. The net effect
is a lower
premium. In the study, underestimating mileage siphoned
off $3 billion from the insurance industry. Customers who do not lie
participate in efforts to make up the shortfall because higher
premiums result for policyholders.
A policyholder spotted as dishonest can have the policy cancelled
and claim denied with the presumption of a deliberate lie. The fact
of the matter may be merely a failure to report changes in
lifestyle. Examples of lifestyle changes that affect costs of
insurance include a change in vehicle, driver or employment
2. Failure to report each household driver
A failure to report each household driver typically involves
conveniently overlooking a high risk teen or adult driver. Audits
may unearth missing household members, who were responsible for $2.6
billion in premium losses in 2008.
3. Deceiving about car garage location
People are increasingly misreporting the location of where they park
their cars. In major cities, parking in certain locations can
drastically affect premiums. Misreporting location resulted in
premium losses of $1.3 billion in 2008.
4. Claiming discounts despite lost eligibility
Drivers who fail to update information that affects discount
eligibility receive discounts to which they are no longer entitled.
Misappropriation of discounts totaled $2.9 billion in 2008.
5. Misrepresentation about car use
Drivers may omit business use from their application or otherwise
fail to disclose this key information. A stay at home worker may use
the car for work-related transportation of clients or products. For
instance, a day car provider who is home-based may shuttle children
to the park each day. A pet walker or sitter may shuttle dogs to the
dog park. A vehicle may be used as a gypsy taxi, or courier vehicle
to deliver documents, flowers, or in food service such as pizza
delivery. Such omissions of business use cause premium loss to the
tune of $1.5 billion
Drivers should be aware that car insurance companies can find out
the facts. Should a teen driver wind up in a collision, certain
facts will emerge.
Insurance companies also employ third party companies to analyze
policies using a battery of tests, data and algorithms to uncover
errors and discrepancies to predict fraud probability. A minor
rating error reduction can yield significant gains in profit, which
can heighten UK insurance scrutiny.