Automobile insurance is something that usually resides in the background of people’s lives. People purchase insurance and pay ongoing premiums, but don’t think much about it beyond that. People do, however, expect it to be there when they need it.
Unfortunately, some drivers with auto insurance find that when they make a claim, their insurance isn’t there for them. Their claims are denied because they weren’t completely honest when they applied for their insurance policies.
If your insurance company accuses you of lying on your application, the consequences can be devastating.
You want full coverage if you are in a car crash. To protect yourself, first understand the California proof of financial responsibility requirements. Second, learn why your insurance company could deny claims based on what you said on your application.
California drivers must demonstrate “proof of financial responsibility”
Every driver in California must carry proof that the driver can cover at least $35,000 in damages from a car accident (See Veh. Code § 16020 & 16056). Most people meet this “proof of financial responsibility” requirement by purchasing automobile insurance.
How much liability insurance must a driver have?
The minimum financial coverage a driver must have for a single car accident the driver causes is:
- $15,000 for injury or death of one person
- $30,000 for the death or injury of more than one person
- $5,000 for damage to someone else’s property.
When crash costs exceed a driver’s insurance limits, the driver must pay the amount insurance doesn’t cover. Victims of the accident can sue the driver for direct costs of the accident, pain and suffering resulting from the accident, property damage caused by the accident, and other types of damages.
Is auto insurance the only way a driver can prove financial responsibility?
While most drivers purchase motor vehicle liability insurance to prove financial responsibility, California allows drivers to choose other options. These include:
- Provide a cash deposit of $35,000 to the Department of Motor Vehicles (DMV) and receive a DMV authorization letter
- Obtain a DMV-issued self-insurance certificate
- Obtain a surety bond for $35,000 from a California-licensed company
These alternatives may not apply to all drivers and may include other conditions.
Drivers must tell the truth on motor vehicle insurance applications
Motor vehicle insurance applications request a lot of information. Questions include everything from where you park your car to how many miles you drive each year. You must report any upgrades you have made to the vehicle and maybe major repairs. Questions may involve details you can’t answer off the top of your head. For example, drivers usually incorrectly estimate how many miles they drive each year. It is better to take the time to look up correct answers than to make an educated guess.
Many insurance applications have errors because the driver didn’t look up details. Fewer errors are a result of outright fraud. When it comes time to file a claim, however, an incorrect answer on the application is incorrect, regardless of the reason.
Common lies people tell insurance companies
Insurance companies share the most common things people lie about on insurance applications. Because the companies often deal with fraud, they tend to treat all misinformation as intentional error. Rather than giving applicants the benefit of the doubt when mistakes are found, they encourage accuracy up front.
Drivers most commonly misrepresent
- the annual mileage driven
- where the car is parked or garaged
- who drives the car
- how drivers use the car (family, business, etc.)
- whether drivers have had traffic violations or accidents
- upgrades or improvements made to the car.
California law requires insurance companies to report insurance information about privately owned vehicles to the DMV. The communications are electronic, and law enforcement and court personnel have access to the DMV insurance status records.
Misrepresentations on insurance applications are likely to be uncovered, whether it is when a driver tries to renew or obtain new insurance, deal with a traffic ticket, or file an insurance claim. The long-term costs of dishonesty far outweigh any short-term benefits of lower premiums.
Consequences of lying to get insurance
If people lie on their insurance applications, they often sigh with relief when they receive the policy. They think they are in the clear.
Most people don’t realize that if the insurance company later uncovers any inconsistencies or inaccurate statements on the application, the company can cancel the policy or deny claims. Some insurance policies have a time limit on when the company must discover false statements, but many do not.
When an insurance company discovers that it issued a policy based on false statements, it has many options. The insurance company could
- cancel the policy
- deny any claims made under the policy
- require the policyholder to pay back the insurance company for higher premiums that would have
- resulted from honest answers
- increase the policy premiums
- pursue civil or criminal claims against the policyholder.
When an insurer cancels an auto insurance policy, the insurer reports that to the DMV. After that, other insurance companies may not issue coverage to the driver.
False statements on an insurance application could make you an uninsured motorist
If your insurance company cancels your motor vehicle insurance, you become an uninsured motorist. DMV suspends your vehicle registration. If you drive that vehicle, law enforcement can give you a ticket, issue a fine, or impound your car.
Without insurance, a driver is responsible for damages if he causes an accident. In addition, an uninsured driver cannot seek recovery of full damages in an accident caused by someone else. In most cases, an uninsured drive can recover only economic damages, even when a victim of another driver’s negligence.
California Prop 213 limits damages an uninsured driver can recover
California law, through Proposition 213, says that uninsured drivers who are victims of car accidents caused by someone else can only recover economic damages. (Veh. Code § 333.4). Economic damages include things like medical expenses, lost wages and car repair bills. Uninsured drivers cannot recover noneconomic damages. Such damages include pain and suffering, disfigurement, loss of enjoyment of life, loss of consortium, emotional distress, and more.
An exception exists when the driver who causes the wreck drives under the influence of drugs or alcohol. If that driver is convicted of a DUI, the uninsured motorist may recover both economic and noneconomic damages.
A few other exceptions may apply, so drivers should consult an experienced car accident attorney whenever questions arise about what damages insurance may cover in which situations.
A Long Beach Car Accident Attorney Can Help You
Your Injuries Are Personal to Me
I have represented thousands of car accident victims. I understand how car insurance companies work and how they evaluate and settle claims. Based on 35 years of helping clients receive just compensation, I will assess the value of your car accident case and recommend the best course of action.
Your injuries are personal to me, so I handle every aspect of your case. We will use every option available to ensure you receive the compensation to which you are entitled.
I offer a free consultation by phone in English or Spanish. You are under no obligation, and you will never pay any money unless you recover compensation for your losses.
Call the Law Office of Michael D. Waks at 888-394-1174 today. Or use the convenient online contact form to schedule a free consultation. Learn how an experienced Long Beach car accident attorney can help after an automobile accident.
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