My brother has lived in Brampton, Ontario for years but has always had a car insured at our parents address in Welland. He says insurance is cheaper there. Can his insurance company know he doesn’t live there? Could there be problems? – Kathy, Mississauga
If you get caught lying about your address to save money on insurance, you could end up paying a lot more while driving.
“You can cancel your policy [by the insurer] for misrepresentation and it is treated with the same severity as drunk driving and manslaughter…. [and the misrepresentation] it never leaves your insurance record,” said Adam Mitchell, CEO of Whitby, Ont.-based Mitchell & Whale Insurance Brokers Ltd., which operates as Mitch. “You’re going to have a very hard time getting insurance in the future … and you’re going to see surcharges of 100 percent plus.”
In most provinces, including Ontario, insurance companies look at where you live when setting your rates. They look at the number and cost of total claims – including theft and accidents – from people living in your area.
This means that insurance premiums in some places are much more expensive 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 usually because smaller cities tend to have less traffic and less theft than larger centers, Mitchell said.
While your insurance company probably won’t knock on your door to make sure you live where you said you do, they may find out you’re lying if you’re in an accident.
“They can get you during claims,” Mitchell said. “When there’s a good-sized fender, it’s explored and [they’ll ask] where you were and why you were three hours away from your assigned address.
Another way you can get caught is if your insurance company sees that there are multiple drivers at the same address who are not related to each other, Mitchell said.
If you are caught in a lie, your insurance company may deny your claim. Plus, in addition to being stuck with higher rates, you could also be charged with insurance fraud, which could lead to fines and jail time, he said.
“It’s a high-stakes game of chicken,” Mitchell said. “It’s a scam – even though it may look like a little cost-saving lie.”
Addressing the problem?
But what if you moved a few months ago and simply forgot to notify your insurance company?
That could be an excuse “if it’s an honest mistake,” said Ann Marie Thomas, director of consumer and industry relations at the Insurance Bureau of Canada.
“For example, if you have an accident about a month after you’ve moved, that could be considered a lapse,” Thomas said in an email. “If you moved a year ago and your insurance documents were mailed to your mom’s house, that doesn’t seem like an omission any less.”
How quickly should you notify your insurance company that you’ve moved?
This varies by company, but it’s a good idea to do it “as soon as you move,” Thomas said. As soon as you notify your insurance company of the move, your rates will change.
“The difference in rates will be reflected in the premium immediately,” she said.
If you get caught using someone else’s address, could they be in trouble too?
“I’ve never heard [of] it’s giving back to someone,” Mitchell said. “That would be difficult to sanction.”
While some might think that lying to your insurance company is a victimless crime, it raises everyone’s rates, he said.
“Insurance is just a huge sum of money that we’ve all contributed to, and the insurance company is the custodian of that bank,” Mitchell said. “Someone who commits address fraud contributes insufficiently to the bottom line.”
Have a driving question? Send it to [email protected] and put “Driving Concerns” in the subject line. Emails without the correct subject line may not be answered. Canada is a big place, so let us know where you are so we can find the answer for your city and province.