[Study]: Auto insurance "hacks" versus fraud

Key takeaways

• The vast majority of policy holders do not consider auto insurance fraud like claiming an old address or exaggerating injuries to be a legitimate hack.
• Gen Z is significantly more likely to self-report considering or actually employing fraudulent insurance tactics. 
• Boomers are the most likely to employ the legitimate hack of bundling for insurance savings.

What are legitimate hacks and what's not?

Before diving into the results of the survey, let’s look at the actual “hacks” that were provided to respondents to test their knowledge level. Many hacks that were included were things anyone might consider for saving money on car insurance — such as:

• Bundling your home and auto insurance
• Paying your policy in full 
• Exploring discounts you might be eligible for
• Reviewing coverage every 6 months
• Driving better/ using a telematics program
• Taking a defensive driving course

Some of the "hacks" might save you money, but it would depend on the circumstances:

• Paying out of pocket for a repair rather than filing a claim (try our claims calculator to see)
• Adding a more experienced driver to your policy
• Downsizing your car

And some of the “hacks” provided as examples were in fact insurance fraud and should not be attempted by anyone:

• Claiming an old address or a relative’s address as your primary residence
• Exaggerating a claim (such as citing damage already on your vehicle as related to a covered event)
• Claiming injuries were more severe than they were

Surveyed individuals anonymously self-reported on which of these tactics they had considered, tried or knew the legality of.

Only 3-4% of those with auto insurance consider soft fraud hacks to be legitimate

In our survey, we learned that the auto-insured population is well-educated about what not to do with their insurance: only a small fraction of people said they have considered doing, have actually done or were unaware any of the fraudulent hacks were illegal.

Gen Z was significantly more likely to consider the fraudulent hacks legitimate

When we look at the data on generation lines, some interesting trends emerge. When asked if they'd consider claiming injuries from an accident were more serious than they were, 17% of Gen Z respondents said they would, which was significantly higher than the average respondent (4%). 

When asked which "hacks" they had actually tried, 15% of Gen Z respondents said they had claimed an old address or a relative’s addresses as their primary residence, compared to the average respondent (4%). 

It is possible that this is a gap in education given Gen Z has less experience with insurance than older generations. When asked which hacks were legitimate, 19% of Gen Z respondents believed exaggerating a claim was legitimate. This suggests a lack of knowledge, not a question of ethics.

Boomers the most likely to bundle

The legitimate hacks on the list also provided some interesting data. As mentioned above, a surprising number of people didn’t consider some of the perfectly legal hacks to be legitimate. For example, only 30% of respondents said they believed using a telematics device was a legitimate tactic for insurance savings. 

However, yet again, this varied widely based on generational lines. Boomers were significantly more likely to utilize insurance savings hacks like bundling home and auto policies together. 61% of auto insured Boomers said they would consider this, compared to 47% of average respondents. 

What are the consequences of soft fraud?

Auto insurance fraud is a deceptive act against an insurance company, usually for the purpose of financial gain. Hard fraud is usually planned such as committing arson to collect insurance money. Soft fraud is usually unplanned or opportunistic such as exaggerating a claim for a bigger payout or lying on your application. 

Fraud of all kinds is a crime with varying punishments. Here are some of the potential consequences:

• Your insurance can drop coverage without notice if fraud is suspected.
• Your claim will be dropped and no compensation offered. 
• You may not be easily able to get insurance in the future.
• If you were awarded money fraudulently you can be sued for not only the money back but costs incurred by the insurance company.
• Criminal punishment ranging from fines, probation or even jail time depending on the severity of the fraud.  

Ultimately, it’s up to you to be educated on what you can and can’t do legally with your insurance. A good rule of thumb is: if it involves lying to your insurance company, it’s likely fraud.

Methodology

Undertaken by Maru Public Opinion, this study was conducted by its sample and data collection experts at Maru/Blue February 10-13, 2023, among a random selection of 839 American adults with auto insurance who are Maru Springboard America online panelists. For comparison purposes, a probability sample of this size has an estimate margin of error (which measures sampling variability) of +/- 3.4%, 19 times out of 20. The results have been weighted by education, age, gender and region to match the population according to US Census data which ensures the sample is representative of the entire adult population of the United States. Discrepencies in or between totals when compared to the data tables are due to rounding.