What Are the Repercussions of Lying On An Application For Homeowners Insurance?

Instead of shopping for the best home insurance to save money, some individuals may lie about home factors to reduce premiums. People who cheat on their homeowner's insurance applications may face various consequences. We've ordered them from the least to the most extreme severity below.

Increased rates. A homeowner may omit certain information from their application to obtain lower charges, such as if they have a dangerous dog breed. Suppose the insurer discovers this during the application review. In that case, the best-case situation is that it will simply increase the premiums to reflect the increased risk.

Refusal of application. If an insurance provider discovers that you have lied on your application, it may reject it outright. Any false information constitutes grounds for refusal, and you will be left without homeowners insurance.

Claim denial or low claim payout. Insurers typically discover homeowners' lies when they later file a claim. Your claim could be refused if you lied about the value of your home in order to receive a reduced premium. Even if the deception is not uncovered, you will receive a payout for the undervalued amount of your home, resulting in financial losses.

Expired policy. Suppose an insurer does not immediately discover a falsehood but subsequently discovers it. In that case, your insurer may instantly cancel your policy, leaving you without coverage.

Fraud charges. The worst-case scenario is that you will be charged with fraud by an insurance company. Even though your application was granted, the insurance company can take legal action if it later discovers evidence that you misled the application or submitted a bogus claim.

It is not worth lying on a house insurance application to save a few bucks per month. It can cost homeowners a substantial amount of money. For instance, the homeowner will receive no money for critical repairs if a claim is refused owing to a past misrepresentation.

You are not out of the woods even if your homeowner's insurance application is approved. There may be consequences in the future. As insurance fraud is frequent, insurers are well-versed in detecting anomalies in applications and claims.

A canceled policy or many denied claims might make it more difficult to obtain affordable house insurance elsewhere, ultimately costing the homeowner more time and money than if they had been truthful on their application.