UK Consumers are making false economies on the Insurance premiums - 29th Dec 2008

As the credit crunch bites and most people are trying to cut back on their out goings,  Association of British Insurers (ABI) has warned that  more and people are giving false information to the Insurance companies to reduce the premiums.

The initial information given to the Insurer forms the basis on which the Insurer calculates the likelihood of the risk and thus determines the premiums to charge. ABI’s research has showed that more and more people are either withholding information or giving false information to obtain cheaper premiums.

Following are some the examples discovered by the Insurers:

•  No disclosing previous claims history.
•  Not informing the insurer that a business is being conducted from the insured house.
•  Not disclosing true information about smoking and alcohol consumption.
• Not disclosing criminal and motoring convictions.
• Adding a person to a motor policy as an additional driver when they are the main driver.
• Being aware that they are being made redundant whilst taking out unemployment cover.

Although everyone has a story when they had difficulty in obtaining the insurance payout from an insurance company when a claim was made, the misleading information provided to insurers is making the insurance companies to carry out thorough checks before they pay out.
Insurance companies use the information provided to them as the basis of writing the policy and if any information provided to them is proven to be false or not true, they will not pay any monies if a claim is made.

Giving false information to obtain cheaper premiums is a false economy as Insurance companies are using new technologies and are sharing information to combat the growing trend of false information being given as the policy proposal stage.

Nick Starling, the ABI’s Director of General Insurance and Health, said, “Honesty is the only policy. Cheating to get cheaper insurance puts your cover in jeopardy, with potentially disastrous consequences. Being truthful and shopping around will mean that your insurance delivers when you need it, and that you get the best possible deal.”