What is Soft Fraud Car Insurance?

When shopping for car insurance, you may come across the term “soft fraud.” While this doesn’t happen often, soft fraud can occur and make it difficult for you to get car insurance. Soft fraud occurs when you are dishonest to your insurer about certain factors that could affect your car insurance. 

Lying About a Driving Record 

Say a driver has a poor record, so they switch insurers and attempt to get another policy. This time, they lie about their driving history. Unfortunately for the driver, insurers and DMVs often work in tandem when it comes to insuring registered vehicles. Even if you attempt to lie to your insurer, your DMV will inform your new insurer about your driving history. 

Lying about your record is considered soft fraud and can get your policy cancelled, or even be grounds for other insurers to deny you coverage. 

Exaggerating a Claim 

Some drivers may be tempted to exaggerate the damages on their vehicle or injuries they may suffer after an accident in order to get more compensation. However, you are most likely to be caught doing so. When you file a claim, the insurer will want proof of the damages and injuries. A claims adjuster will investigate your claim to calculate how much compensation you will receive based on the damages and your policy. If they find that you have exaggerated the claim, your claim could be denied or your policy cancelled. 

Drivers Not Listed 

Another example of soft fraud is if you have someone else sharing your vehicle who is not on the policy or is unknown to your insurer. For example, if your mom’s car breaks and she begins sharing your vehicle, which is on its own separate policy, you would either need to notify your insurer or add her as an insured driver. Failure to do so, especially if she then gets in a wreck in your vehicle, can cause issues with your car insurance down the road. 

Living Somewhere Else 

Car insurance premiums vary location to location. If you say you live somewhere while actually living somewhere else entirely, such as putting your car insurance under an old address in order to save money, you could lose your insurance policy. 

Keep in mind that insurers generally connect with each other and your record will follow you. A cancelled policy or act of soft fraud can make it difficult to find car insurance in the future.