My brother has lived in Brampton, Ont., for years, but he has always had his car insured at our parents’ address in Welland. He says insurance is cheaper there. Could his insurance company find out that he doesn’t live there? Could he get in trouble? – Cathy, Mississauga
If you get caught lying about your address to save money on insurance, you could end up paying a lot more for as long as you drive.
“You could get your policy cancelled [by the insurer] for misrepresentation and that’s treated with the same severity as drunk driving and vehicular manslaughter... [and the misrepresentation] never comes off your insurance record,” said Adam Mitchell, chief executive officer of Whitby, Ont.-based Mitchell & Whale Insurance Brokers Ltd., which operates as Mitch. “You will have a very hard time getting insurance in the future … and you’ll see surcharges of 100 per cent plus.”
In most provinces, including Ontario, insurance companies look at where you live when they set your rates. They look at the number and cost of overall claims – including thefts and crashes – by people living in your area.
That means insurance premiums in some places are a lot pricier than others. In a survey this year by Rates.ca, an insurance comparison site, Brampton had the highest average annual rates in Ontario, at $2,707, followed by Toronto at $2,325 and Mississauga at $2,311. In Welland, it was $1,463.
That difference is generally because smaller cities and towns tend to have less traffic and fewer thefts than bigger centres, Mitchell said.
While your insurance company likely won’t be knocking on your door to make sure you live where you say you do, it could find out you’re lying if you get in a crash.
“You can get caught at claims time,” Mitchell said. “When there is a good-sized fender bender, it gets investigated and [they’ll ask] where you were and why you were three hours from your designated address.”
Another way you can get caught is if your insurance company sees that it has multiple drivers at the same address who aren’t related to each other, Mitchell said.
If you get caught lying, your insurance company could deny your claim. Plus, on top of being stuck with higher rates, you could also be charged with insurance fraud, which could come with fines and jail time, he said.
“This is a high-stakes game of chicken,” Mitchell said. “It’s fraud – even though it might look like a little cost-saving lie.”
Addressing the problem?
But what if you moved a few months ago and just forgot to let your insurance company know?
That could be an excuse “if it’s an honest mistake,” said Anne Marie Thomas, director of consumer and industry relations with the Insurance Bureau of Canada.
“For example, if you get into an accident a month or so after you move, that could be looked at as an oversight,” Thomas said in an email. “If you moved a year ago and your insurance documents have been mailed to your mother’s home, that looks less like an oversight.”
How quickly do you need to let your insurance company know that you moved?
It varies by company, but it’s a good idea to do it “as soon as you move,” Thomas said. As soon as you let your insurance company know of the move, your rates will change.
“The difference in rates would be reflected in the premium immediately,” she said.
If you get caught using someone else’s address, could they get in trouble, too?
“I’ve never heard [of] it blowing back on somebody,” Mitchell said. “That would be hard to penalize.”
While some might think lying to your insurance company is a victimless crime, it drives everybody’s rates up, he said.
“Insurance is just a giant pot of money that we’ve all contributed into and the insurance company is a guardian of that pot,” Mitchell said. “Somebody who’s committing address fraud is undercontributing to the pot.”
Have a driving question? Send it to globedrive@globeandmail.com and put ‘Driving Concerns’ in your subject line. Emails without the correct subject line may not be answered. Canada’s a big place, so let us know where you are so we can find the answer for your city and province.