Tell the truth to the insurance company

I have had a rash of calls lately. People who have been in car accidents and have panicked. That panic has led them to do something dumb: lie to the insurance company. 

Lying to the insurance company can be insurance fraud. How do you know? If you make a material misrepresentation to the insurance company, it is fraud. Of course, what is a material misrepresentation.

To be material, it must be something that would affect whether a claim is covered or not. So, if Bill is an excluded driver from your policy and drives your car causing a collision, it would not be covered. If you tell Bill that Susie was driving instead, it would then be covered. Of course, now the insurance company would be paying a claim that they would not otherwise pay. This would be a  material misrepresentation. 

So, if that is a material misrepresentation, what is not material? Lets say your child get in an accident today on 14th street. Your child shouldn't have been on 14th street because you did not give them permission to be there. Your child tells you the accident happened on Main Street, where your child did have permission. Your child is covered by the policy. This is not a material misrepresentation to the insurance company, since the insurance company would pay the claim anyway.

Remember, an uncovered claim is not the end of the world. Do not lie. A lie can be insurance fraud and in California that is punishable by up to 5 years in prison and a $50,000 fine.