Mr. Hidalgo’s case highlights the serious consequences that can come from misleading your car insurance company.
A commercial vehicle registered under a personal policy
Hidalgo was involved in a car accident on the New Jersey Turnpike, in which personal injuries were sustained. This accident revealed to his insurers that the van was incorrectly registered.
Third degree insurance fraud in New Jersey can mean a sentence of three to five years in prison. Hidalgo was charged on a complaint/summons, and a court hearing was scheduled for April 19.
The difference between soft and hard car insurance fraud
Car insurance fraud is a serious crime that can lead to serious consequences. Even if you have gotten away with it for a long time, it is extremely risky, and the fraud will be revealed if you ever need to make a claim.
Allstate, there are two categories of car insurance fraud: hard fraud and soft fraud.
Soft fraud is more common. Examples include misrepresenting the value of stolen property in exchange for a larger payout, failing to tell your insurance company about all the drivers in the household, and using someone else’s address because car insurance rates are lower in that area.
The other type of car insurance fraud—hard fraud—is much more serious, and often results in jail time. Examples include staged auto accidents or a planned vehicle theft in order to receive a large insurance payout.
As reported by
Insurance Journal, the potential for commercial use fraud—the crime Hidalgo allegedly engaged in—begins at underwriting, when a driver misrepresents their intentions for using a vehicle in exchange for a lower annual premium. Commercial policies typically cost more than personal ones.
When is comes to car insurance, honesty is the best policy
Soft insurance fraud is almost always motivated by the desire to save money. But not only is this extremely risky—a conviction could lead to jail time or thousands in fines—it is also very shortsighted. If you get caught committing insurance fraud, your future premiums will skyrocket, and you may not be able to find coverage at all.
In addition to this, when someone commits car insurance fraud, law-abiding citizens suffer the consequences. Fraud is often cited as one of the reasons for high car insurance premiums in the U.S., compared to other countries.
The bottom line is, if you are dishonest with your car insurance company, they will most likely find out. What may seem like a smart way of saving a few dollars in the short term could end up costing you thousands down the road.