1 in 5 surveyed admit lying on their insurance applications

One in 5 Americans surveyed have admitted to lying to some degree on their insurance applications, according to a new report from NerdWallet.

Home, auto and health insurance applications have been affected by this trend and it appears to be increasing based on the results of NerdWallet’s 2024 Insurance Dishonesty Report.

“Customers are really feeling the pinch, rising prices and high interest rates have been very difficult on people trying to afford insurance plans,” said NerdWallet’s Melissa Lambarena.

Financial pressure is the primary reason that over 21% across surveyed all age groups said they feel the need to lie on their applications, according to the study. Over 45% of Americans who lie on their applications do so to save money when choosing their insurance plans.

Insurance rates have risen across the industry, with homeowners seeing an average increase of 11.3% in 2023 on home insurance rates. Car insurance rates have grown even higher, with an average increase of 21%, according to the Consumer Price Index.

“Healthcare costs have increased, but the biggest jumps are in home and auto repairs,” said Lambarena. “Insurance companies have raised rates dramatically in part because the cost of replacement for cars and homes have become so expensive.”

While rising costs have been major issues across the board for Americans, Lambarena said several trends may have pushed younger Americans into lying more often than older generations. In particular, she pointed out that younger generations have larger amounts of credit card debt than previous generations. Furthermore, with lower average credit scores, younger Americans are facing higher rates than their older counterparts.

NerdWallet’s study indicated several additional factors that have influenced people’s decisions. For instance, many health coverage applicants believe they will not receive the proper coverage or may incur higher rates if they tell the truth about their lifestyle habits, such as smoking.

The fear of a loss of coverage motivates people to lie on their health insurance applications. Some applicants believe that lying could help them maintain their coverage despite the risks associated with their deception. Similarly, TrueWallet discovered that of those who lie on their car insurance applications, many underreport their yearly mileage in the hopes of incurring lower rates or better coverage..

Approximately 40% of Americans of any age who have lied on their applications believe that insurance companies do not consider their unique circumstances when calculating their rates. Dissatisfaction with such a blanket approach to insurance plans has led many applicants to lie because they believe providers wouldn’t respond appropriately to their situations.

Of the 19% of Americans surveyed who approve of deliberate deception on car insurance applications, many cited lower rates and increasing financial pressure to justify their decision-making.

Lambarena cautioned those who are deliberately lying on their applications. “What they’re doing is insurance fraud regardless of their reasons.” She said the loss of coverage alone could be devastating for Americans considering falsifying their information but added that criminal charges could also apply depending on the case.

To lower costs, Lambarena suggested bundling home and auto insurance while working on increasing credit scores. As for the roughly 11% of Americans who have opted to forgo insurance completely, she says their choice could have significant ramifications. “Consider insurance in the sense that it is protection against the unexpected. Car breakdowns, robberies, and other unexpected events can be devastating without insurance to mitigate their effects.”

The survey of more than 2,000 U.S. adults was commissioned by NerdWallet and conducted online by The Harris Poll.

Devin Wilhelm has a master's degree in professional writing and is based out of Hershey, Pa. His main beats are fintech, corporate finance and market research.  Contact him at devin.wilhelm@innfeedback.com.

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Devin Wilhelm has a master's degree in professional writing and is based out of Hershey, Pa. His main beats are fintech, corporate finance and market research. Contact him at devin.wilhelm@innfeedback.com.