Four 'little white lies' you shouldn't tell your auto insurance company

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Gina Roberts-Grey

Little white lies don't hurt anyone, right? After all, what's the harm in telling your mother-in-law you love her apple pie when you really don't or fibbing to a pal to get out of going to lunch?

Some fibs aren't so bad. But tell a little white lie to your auto insurance company, and you could end up with a denied claim, a canceled policy or even legal troubles.

Sonja Larkin-Thorne, a consumer advocate associated with the National Association of Insurance Commissioners, says that when it comes to insurance, "there's no such thing as a 'good' lie." Even if it's one that might save you a buck or two on your premium or help you get an auto insurance claim approved.

"Most policies contain language allowing for cancellation or non-renewal if you intentionally fail to disclose information necessary to properly underwrite and rate an application," Larkin-Thorne says.

In other words, one little white lie could land you in a whole lot of insurance trouble.

"Insurance companies know all the tricks and are generally on the lookout for lies, schemes and scams," says Ashley Hunter, a former insurance claims supervisor who is an insurance risk specialist in Austin, Texas.

Here are four fibs that auto insurance companies often hear from clients, according to Laura Malamud, a former auto insurance claims agent for GEICO.

1. "I put on my turn signal before I changed lanes."

Lying about your driving behavior when an auto accident occurred -- which includes lying about stopping at an intersection, not speeding and so on -- is one of the most common lies heard by auto insurance companies.

If there are witnesses to your accident who say you did otherwise, Malamud says you can be found partially or totally at fault for an accident. Depending on where you live, you claim payment may even be blocked.

Witnesses aside, some insurance companies will hire accident reconstruction specialists to determine fault and other details about the crash.

"So don't try to dupe your agent during the claim process," Malamud says.

2. "My friend/relative never drives my car."
If a person not listed on your policy drives your car on a regular basis and gets into an accident, your rates can go up. Depending on the circumstances, this lie can trigger denial of your claim. The same goes for where you park your car when it's not in use.

"In many instances, where a car 'lives' affects rates and coverage," Hunter says. "Rates are often set based on your area."

Lying to get a cheaper rate can lead to your policy being canceled or to your rates climbing if your auto insurance company finds out about your fib.

3. "I need massage therapy for injuries related to my accident."

Malamud says all medical claims need accompanying medical records to confirm the need for treatment.

"If you go to a massage therapist and it isn't clearly related to the claim, your medical expense can be denied and can prompt a fraud investigation," she says.

4. "I drive only a couple of miles to and from work."

If you get into an accident while driving a significant number of miles beyond what you reported on your insurance application, Malamud says your claim could be denied and you'd be responsible for all damages.

Lies of omission

Lies aren't always just what you say -- sometimes they're what you don't say.

Larkin-Thorne says failing to list all drivers in the household, such as teens or college-age kids, or failing to mention that you use your car for business, such as delivering pizzas at night, can land you in hot water.

Failing to disclose previous damage is another potentially troublesome omission. In other words, don't try to pass off a bashed bumper from two years ago as something that occurred during a rear-ending that happened last week.

"Whether either the new or old damage is your fault, the claim could be drastically delayed or even denied if the insurance company -- yours or the other guy's -- finds out you're trying to pass off old damage as new," Malamud says.

Regardless of the circumstances, you'll save yourself a lot of heartache by simply coming clean.

"Telling your insurance company all the facts is truly the quickest, most direct route to settling a claim," Larkin-Thorne says.