When you secure an insurance policy, for anything from a company car to commercial rental property, the insurer will ask you many questions about you and whatever it is you are insuring. The insurance company can verify some of the information you provide, but other information they cannot. The insurer must trust your answers are truthful.
When you sign your insurance contract, you make an agreement that everything you stated in the contract is true. You could end up with a huge problem if something in your contract is not correct or truthful even if you were unaware that it is not accurate. CNBC explains that there are a few different ways the insurance company may handle inaccuracies on your car insurance application.
Some people may lie on purpose on an application. This may be an attempt to get a lower rate. The insurance company can uncover many untruthful things, such as anything related to your public record or credit. Other things, such as misstatements about assets, may be more difficult to uncover.
It is also possible that you could accidentally state something incorrectly on your application. For example, if you gave the wrong square-footage of a property or gave an incorrect birth date for a driver, these could be simple mistakes.
If the inaccuracy is a mistake, then the company may simply help you correct it and adjust your policy as needed. However, if it was deliberate, then the company can press charges against you for fraud, which can bring serious criminal charges and penalties. You also face the chance of the company canceling your policy or not paying on any claims that you have