Slightly more than half of all applicants for auto insurance don’t tell the truth, trying to save a few bucks on premiums, according to a survey of 3,000 consumers by insurance marketplace CoverHound.com.

Certainly, car insurance is expensive, and in one survey, almost two-thirds of the drivers who submitted false information to insurers said they did so to save money. A Consumer Federation of America report found that most motorists pay $500 annually for coverage, and many pay more than $1,000. (Want some money-saving ideas? Read 12 Car Insurance Cost-Cutters and How Auto Insurance by the Mile Works.)

Key Takeaways

  • Mendacious motorists have many ways to cover up inconvenient truths that could make them pay higher rates.
  • Sometimes, it’s a matter of neglecting to confess to having traffic tickets or accidents.
  • Other times, applicants fib about where they house the car or who else will drive it. 

Playing the Odds

If folks like these file a claim, though, the insurance company likely will find them out. Their investigators will make a big effort to verify whether their application was accurate. They stand to get their policy rescinded and civil fraud penalties are possible.

Men and women lie equally to insurers, while Millennials are more likely to prevaricate than their elders, according to a report by Coverhound.com.

Rates are set using a whole host of factors other than one's driving record. People often are asked, for instance, to provide their credit history, the average number of miles they drive and their vehicle’s year, make, and model. For more on the topic, see How Insurers Decide Your Auto Insurance Rate.

The goal of providing false information—to make oneself look like a better driver and one's car appear to be a better risk—is a tempting, if morally dubious, strategy for pushing insurance premiums lower. But it’s one that’s fraught with its own risk: being found out. Omit the drunk driving citation you got? Pretend that your junker is a more roadworthy auto with lower mileage?

On the surface, the odds that someone's car will run into trouble seem small. In 2014, there were roughly 6 million crashes in the U.S. And the nation had 212 million licensed drivers. That means a driver has about a 3% chance of getting involved in some kind of accident every year. Also, someone might have their car stolen or vandals may trash it. The question is whether the driver wants to trust in luck, year in, year out.

Typical Lies Motorists Tell

Often, policyholders who are telling a whopper contend that they made a mistake or simply forgot to include something crucial in their history. Auto insurers, of course, have heard such stories before; their probability of receiving lenient treatment is slender to nonexistent.

Here are some common omissions and untruths that may result in a lost policy, inability to get new coverage, fines, a legal order to pay back premiums—even jail time: 

Common Omissions by Drivers

Accidents or Tickets

This is the easiest thing for insurers to look up, regardless of what state you live in. The fender bender you sustained on the West Coast did not vanish from databases when you moved to New Jersey. Although that speeding ticket you got may seem like ancient history, the insurance carrier will not sympathize.

Who the Main Driver Is

Typically, this involves a parent claiming to be the one who uses the insured car the most, when in reality it is his college-age son. Young men have high premiums because they get in more accidents and are bigger risks.

How Many Miles You Drive

The more time a car spends on the road, the greater the likelihood it will be involved in an accident. Usually, a motorist will claim the daily commute to work is a lot less than it really is. That makes explaining what happened more difficult when the driver smashes up the auto far away from home.

How You Use the Car

Let’s say someone uses his car for work—delivering pizzas or hauling around tools to make home repairs. But he tells the insurer that the vehicle is solely for shopping and recreation. When he gets in a wreck on the interstate and the police report notes the dozens of pizza pies splattered all over his car’s interior, it doesn’t look good to the insurance company investigating his claim.

Where You Actually Live

If your home is in a high-crime area or big city, you could be inclined to list your sister’s address as yours. She lives in a peaceful suburb, which statistics show has a lower chance of a car being stolen or damaged. That lie is very easy to disprove.

The Bottom Line

Not being honest with an auto insurance company may seem harmless, and the payoff in lower premiums may make the little white lie look worthwhile. But if that person files a claim, he or she very likely will be unmasked, and the consequences are harsh.

There are legal ways to lower car insurance, as you'll read in Top Tips for Cheaper, Better Car Insurance, 10 Car Insurance Myths and How to Reduce Auto Insurance Costs.