No one wants to have a car accident. Certainly, no one wants to be hurt in a car accident. Unfortunately, accidents do happen. Having the right coverage for your vehicle usually means you’ll have the protection needed to have your car repaired, or in case of injury, have help to rehabilitate yourself back to health. However, there are times when the actions of car owners puts their insurance policy and coverage at risk.
Most Common Reasons for Denying a Claim
Undisclosed Regular Drivers – It’s true you can lend your car to anyone, but be warned you are also lending your car insurance. One off situations where a friend needs your car for a day are fine. Make sure everyone has a valid driver’s licence before your lend your car because any accidents they have will affect your insurance rates.
However, when there is a regular driver of the car and you have not informed your insurance company you could see your claim being denied. This happens frequently as parents of underage drivers don’t add their son or daughter to the policy, or a spouse is not added to a person’s insurance policy because of a poor driving record. Sometimes a parent will buy a vehicle and register it in their name, tell the insurance company they drive it when in fact it’s really their child’s car in all but name.
All these schemes are used in the hope of saving money. However, when the undisclosed driver has an accident the insurance company could deny the claim. This could be costly if there is an injury involved.
Performance Enhancing Modifications – Car enthusiasts love to tinker with their vehicles. Sometimes they’ll replace stock parts with enhancements that increase the power and performance of their car and not tell their insurance company. Why? Because most regular market insurance companies don’t insure modified vehicles. And those cars with enhancements have to be insured with specialty insurance companies, which means more cost. Not telling your insurance company about performance enhancements could void your insurance policy in the event of a claim.
Criminal Activity – If a person is using their car in pursuit of criminal activities any accident will be declined by the insurance company. As well, any criminal charges under the highway traffic act, such as impaired driving charges and convictions, will negate the policy, which means no repairs will be covered by the insurance company.
Undisclosed Commercial Use – Sometimes someone using their car for commercial reasons thinks it’s cheaper to have the car insured as though it was only for personal use (ie getting groceries, driving to work and back etc). Using your car for business reasons, for example visiting clients, making deliveries, hauling third party products, being an Uber or Lyft driver etc, and not telling your insurance company could mean any accident you have while using your vehicle for business could be denied.
Failing to Disclose Where Your Car is Actually Garaged – There are some areas of Ontario that are far more expensive for car insurance than others. This could be due to a lot of reasons such as frequency and severity of accidents, increased number of vehicle thefts, and increased insurance fraud to name a few. Sometimes, people tell their insurance company they live in a cheaper area when actually they live in a more expensive area. In the event of an accident they could see their claim denied.
How Do Insurance Companies Find Out?
Insurance companies now have highly trained fraud units whose job it is to investigate any claim where there is suspected deception on the part of the insured. When a person is caught deceiving or lying about their car usage they will have a Material Misrepresentation on their insurance record.
A Material Misrepresentation is the act of intentional hiding or fabrication of a material fact, which, if known to the other party, could have terminated or significantly altered the basis of a contract, deal or transaction.
An insurance policy is a legal contract between the insurance company and the car owner and having a Material Misrepresentation on your record negatively impacts your insurance rates for 10 years!
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