Fudging Facts 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 location.

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.