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Even minor falsehoods on a claim or application can qualify as insurance fraud.Pattanaphong Khuankaew/iStockPhoto / Getty Images

My son told his insurance company that he has winter tires so he could get a discount. It’s a lie – he doesn’t have winter tires. He says he has to fib because his rates are so high that he can’t afford winter tires. He also tells them that he drives less every week than he actually does. Could he get in trouble if his insurance company finds out? – Tim, Mississauga

For insurance companies, there’s no such thing as a little white lie.

“We take fraud very seriously, and there's no such thing as harmless fraud,” said Joe Daly, spokesman for Desjardins General Insurance Group, in an e-mail.

If you’re caught lying to your insurance company, they might change your insurance rate retroactively to reflect what you should have been paying, Daly says.

So if you’ve been getting a five per cent discount for having winter tires for the last two years, for instance, they could make you give them all two years of that discount back.

If you’ve made an insurance claim after a crash and they discover you were fibbing – say, if the collision report or the invoice from the body shop shows that you didn’t have winter tires – they might not cover the crash.

“They could cancel your insurance policy entirely, and you’d now be listed as a high-risk driver,” says Matt Hands, business unit director of insurance and accounts at Ratehub, a rate comparison site site. “That would be on your record for five to nine years, and you’d be paying a lot more to get insurance somewhere else.”

Your insurance company could also sue you.

“An auto-insurance policy is a contract.” said Malon Edwards, spokesman for the Financial Services Regulatory Authority of Ontario (FSRA) in an e-mail. “Both the policyholder and the auto insurer are bound by it.”

FSRA couldn’t immediately provide recent statistics on the amount of insurance fraud in Ontario every year.

But fraud, even when it’s seemingly minor, affects everyone’s insurance rates, Daly says.

“False information leading to rate evasion is a serious issue for auto insurers, which helps drive insurance costs up for everyone,” Daly says. “If someone cheats to get a cheaper premium, others have to pay more. That’s not fair.”

Here are a few other lies and omissions that your insurance company considers fraud:

  • Not mentioning that speeding ticket from last year: When you apply for insurance, your insurance company checks your driving record. Any tickets you’ve had – even tickets in most other provinces – will show up. “There is no point trying to hide speeding tickets or at-fault accidents,” Daly says.
  • Lying about where you live: In most provinces, insurance rates vary depending on your postal code. “I moved from London [Ontario] to Toronto and I saw a $40-a-month increase in my insurance,” RateHub’s Hands says. “So some people might decide to use their parents’ address to save money – that’s still fraud.”
  • Lying about an occasional driver: “A lot of people list their kids as occasional or secondary drivers when really they’re the primary drivers of the car,” Hands says. “It’s not a true depiction of the situation.”
  • Not mentioning that you’re an Uber driver: If you deliver Uber Eats or ferry people around for Lyft, you have to tell your insurance company, even though those services often have their own insurance coverage. “If your insurance provider finds out, you could be on the line for any damage or hefty medical bills,” Hands says.

But will your insurance company actually find out that you’re lying about all these things?

“Maybe they won’t – but it’s risky,” Hands says. “It’s typically when you go to make a claim that these things can come to light, and this is when you need insurance the most.”

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