There are a lot of people out there who lie about where their car is garaged –– that is, commit insurance fraud ––to save a few hundred thousand dollars in car insurance premiums.
Don’t do it.
First, it’s wrong. It’s a form of theft. Insurance industry analysts estimate that garage fraud -–the intentional falsification of vehicle garaging locations to obtain a lower insurance premium –– costs insurers as much as $2 billion every year.
But they’re not the ones that pay it. Every driver on the road pays the cost. Garage fraud – sometimes called “address fronting,” causes premiums to go up by an estimated 1% for everyone else.
Second, garage fraud can give insurance companies the excuse they need to deny your claim. If you insured your vehicle telling your insurance carrier that you live in Green Acres, and you accidentally rear end a Bentley in Beverly Hills –– because that’s where you moved with your family and where you’ve actually been living the last four years, your carrier’s going to do some investigating before they pay the claim.
And if they do, you’re gonna get caught.
Car insurance companies are increasingly cracking down on garage fraud. And thanks to new technology (you can thank the Global War on Terror for a lot of it!), they have effective tools to do it.
One of them is “vehicle tracking.”
That’s right: Big Brother is, in fact, watching you.
There are companies that specialize in capturing tag sightings from red light cameras, toll booths, discreetly placed surveillance cameras on major thoroughfares and choke points, and even roving “camera cars” that drive through neighborhoods, their cameras automatically picking up every license plate that comes within their line of sight.
Artificial intelligence algorithms automatically process these license plate sightings, sort them by their insurance carrier and other customers, log the vehicle location, sort the location data according to insurance premiums, and send alerts to car insurance companies.
If you’ve listed your car as garaged in your vacation home in Naples, Florida, but your carrier has a report that your car’s been sighted 597 times at the Lincoln Tunnel, but has never been sighted on I-75, the Florida Turnpike, or the Tamiami Trail, then you’re going to have problems.
Modern telematics also allows carriers to find out where you’re driving more directly. They may get automated geolocation data everywhere you drive.
They may run a geolocation report on your car when it’s time to renew your policy. If your car’s been spotted hundreds of times in parked on Kensington in Philadelphia, but has never been spotted anywhere near East Durham, New York, where you told your carrier you have it garaged, you’re going to have problems.
And that cheeseball car insurance agent winked at you and told you to list your car at your Mom’s house in Cape Girardeau, even though you are living in Long Island and commuting to Manhattan every day so you could save money on your car insurance isn’t doing you a favor.
Not at all.
He’s exposing you to multiple massive risks:
First, the risk that your car insurance company will refuse your claim when it counts.
And second, the risk that you could be prosecuted for insurance fraud.
The maddening thing is, he’s doing it while happily pocketing his commission for your premium, anyway.
By the way, if your strip mall insurance agent does this with you, he probably does this with a lot of people.
Insurance carriers know this happens, too. If your agent gets caught with an extraordinary number of garaging discrepancies, the carrier is probably going to send investigators to the neighborhood (even if only digitally) and go over his book of business with a fine-toothed comb.
Which provides your insurance company with another avenue to catch you.
Insurance carrier are now aggressively pursuing garage fraudsters and address fronters and it’s not just to plug the $2 billion annual gap in stolen insurance premiums. It’s also because the people who are willing to lie about where their car is garaged are also more likely to commit other forms of fraud. Insurance carriers are getting wise to the fact that their real exposure from the kinds of people who deliberately write in false information on their car insurance applications is much greater than the $2 billion in lost premiums due to garage fraud alone.
If your carrier rescinds your policy, you could find it difficult to get car insurance in the future. If you do, you’ll be flagged as a high-risk account and you’ll have to pay higher premiums.
Don’t risk your reputation, sacrifice your integrity, and expose yourself to massive levels of risk by committing insurance fraud. Insurance companies are cracking down, and they’re getting good at it. You’re more likely to get caught now than ever before.
And if you’re the type of honest customer who responds to articles like this, I want to be your car insurance broker.
It doesn’t matter if you have a few dings on your driver’s record, or even a DUI. We’re specifically built for non-standard risk and high-risk drivers and other specialty markets. Call us today at (855) 438-7353 and ask to speak to one of our professional agents. Or just fill out our easy online form and we’ll get back to you, pronto!
See you on the road!
Steve “Mr. Insurance” Ludwig
CEO, Select Insurance Group