Most auto insurance policyholders trust their insurance company to approve their claims when they’re involved in a car accident. However, there are a few instances where criminal or illegal activity—either intentional or unintentional—can lead to a denial of your claim. These activities can include overt fraud or even something as simple as the discovery of counterfeit documents in your vehicle. If the police uncover evidence of a crime in the aftermath of the accident, you not only may face criminal charges, but you’ll also see higher rates on your policy or the cancellation of your auto insurance coverage altogether.
How Insurance Fraud Can Impact an Auto Insurance Claim
One of the easiest ways to ensure your claim is denied is to commit insurance fraud. Types of insurance fraud can vary, but the FBI estimates that insurance fraud costs the average family between $400 and $700 in premiums a year.1 There are two common types of insurance fraud: hard fraud and soft fraud.
Common hard insurance fraud scams include:
- Staging an auto accident to force another driver into a crash and then claim it’s their fault
- Vehicle theft in which the owner has someone else steal the car and strip it for parts and then files a claim
Common soft fraud practices involve:
- False or omitted information on insurance applications, including incorrect address information
- Misrepresenting claims, such as including previous damage as part of a current claim
- Submitting claims forms for injuries or damage that have not occurred
If your insurance company finds that you’re responsible for or engaged in any of the above practices, there’s a high chance that they won’t just deny your claim—they’ll also probably cancel your policy.
How Criminal Activity Influences Your Auto Insurance Rates
As a general rule, driving-related offenses increase your insurance premiums. The amount your rate will increase will depend on the type of offense you engage in. A speeding ticket could raise your premiums by 24%, while drunk driving could raise your rates by 70%. Generally, the more serious the offense, the more your premium will increase.
Insurance companies do not typically run criminal background checks, so non-vehicle related offenses probably won’t impact your insurance premiums. An exception to this rule would involve prison time. If you’ve spent time in jail, your auto insurance may have lapsed. Most insurance companies view a lapse in coverage as an indicator of elevated risk, so your premiums may increase.
Car Accidents Caused While Committing a Crime
Being involved in a car accident while in the act of committing a crime, such as being the getaway driver in a robbery or burglary, will undoubtedly lead to your claim being denied. Reckless driving, either as a result of driving while intoxicated or as part of a serious offense like a hit-and-run, will not only lead to denied claims, but may also lead to your insurance policy being terminated and your license being revoked.
Discovery of Illegal Activity Unrelated to the Accident
But what if your illegal activity is unrelated to the accident? For example, consider someone who is involved in an accident after shoplifting. Although this person has stolen goods in their car, the illegal activity was not the cause of their accident. However, the insurance company might deny their claim due to the perceived risk of a driver who engages in criminal behavior.
SelectQuote helps compare auto insurance rates to find the best fit for your needs.
If you’ve previously been labeled high-risk but no longer fit that qualification, you may have questions about how your past can influence your current auto insurance premiums. At SelectQuote, we’ll help answer any questions you have about auto insurance coverage. We compare rates from some of the most trusted insurance companies to help you save time and money, finding you coverage that meets your unique needs.
