Reader question:

The zip code I live in has very expensive auto insurance prices. I put in the zip where I used to live (not very far away) to see what kind of rates I would get for that, and it was much better. Is it legal to use a different address to get cheap car insurance rates?

Amber

No, definitely not.

If you did that, Amber, you would be committing car insurance fraud. While for the most part your car insurance company wouldn’t go after you for something as petty as lying about your living address, but in case you ever filed a claim for your vehicle with that address on your policy, and they found out that the address was false, then you would not be getting a cent of your claim money, even if the other driver willfully rammed you off a cliff. And there are several states where the DMV will see your claim being denied for fraud as the same as though you never had car insurance coverage in the first place, and you could get the same results. That means fine, court, maybe a lawsuit, a loss of your license, and a long standing blemish on your car insurance score that all of your future companies will see. Are you willing to risk that just to get cheap car insurance rates?

While lying about where you keep your car may seem like a small thing, you are making yourself in a huge way responsible for the rising costs of car insurance premiums in your area. In many places, these high prices for car insurance rates are directly the cause of car insurance fraud. Some fraud has a bigger impact than others, and while it may manifest in the person of someone claiming a fraudulent injury and receiving thousands of dollars in court, in can also manifest in many people like yourself making small fraudulent statements for a couple hundred dollars, that all amounts to the same end result in dollar terms. No matter how innocuous you may seem, you are making other people who have nothing to do with this pay for your own problem.

The reason why it makes a difference what address you put down is because the risk that they put to your name depends on several factors, including your area. If you have a higher risk for, say, car theft because you live in a high crime area, but you put yourself down for a low crime area, then you are still just as risky a customer, but the company is not charging you for this risk. It might eventually come out when your car gets stolen, or it might not. Either way, there’s somebody out there who has to pay for your missing risk, and it probably isn’t you.

There are plenty of ways to lower your car insurance premium without committing fraud. It’s so simple. The first step you need to take is to raise your deductible to a higher amount, so that while your out of pocket expenses may be more, your car insurance premium will be much lower. Then you might want to think about paying your entire six month premium at the same time instead of doing the more expensive way of monthly payments. You should also think about cutting your coverage to only what you think is necessary. Finally, shop around to make sure you’re getting the best quotes (at your real address!) and stick with the company that treats you best.

Cheers,

Fashun Guadarrama.