You can find yourself faced with some serious consequences if you lie to your car insurance company in order to receive a lower car insurance premium than you really deserve. Many people may lie about the number of miles they drive each year because they know that insurance companies use it as one metric to determine your risk. However, while you may save a few bucks, insurance companies actually lose billions of dollars every year in lost premium payments that they should have collected from riskier drivers that they were not aware of. Insurance companies call this loss of money premium leakage.

While consumers may not consider it a big deal to lie to their car insurance companies, the companies do not take the situation lightly. Not accurately disclosing the amount of miles you drive every year is just one in a long list of lies that insurance companies are told in order to receive a lower cost insurance premium that is undeserved. Some car owners go as far as to lie about whether or not their teenager is a primary driver on a car. They may also lie about how the car is actually used knowing full well that it is used for business-related travel instead of strictly personal use. Disclosing these facts would surely increase a person’s risk for an accident and ultimately his or her car insurance premium as well.

Car insurance companies have several ways that they can find out if you are lying to them about your driving habits. They actually go to great lengths to collect information on drivers and then tease out patterns through statistics and complicated algorithms. They compare notes on the statements you make and the reports filed by your mechanic or dealership. They hire consulting firms to help them find serious offenders.

So, you may ask yourself, what can happen if you are caught lying? Your car insurance company can deny your insurance claim if they can provide evidence that you have been particularly deceitful. They could also cancel your car insurance policy all together. These two actions, although extreme, could have serious implications to your ability to purchase affordable car insurance in the near future after suffering from a canceled policy. While it may be tempting to fib to your car insurance company on what you consider a little matter, it is a big deal to your insurance carrier. And, it is not worth the risk you are taking should they find out.