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The Dangers of Insuring Family Members or Friends: Fraud

It started off innocently enough.

Your 16 year old child has just obtained his or her drivers license and he or she is living with you.  You buy a car and now it’s time to get insurance.

First and Foremost

If you have a child who turns 16 years of old years of age or older who is living with you, you must notify your insurance company of his or her existence regardless of the fact that they have or do not have a drivers license. This is required under many policies. Failure to do so could result in a voidance of your policy at a later date.

Time Goes Fast

You have bought a new car and you put your son or daughter (or any other family member) on the insurance policy as a principle driver…..great job!  Now, your son or daughter is moving away and you have decided that you will continue to maintain their insurance to give them a “head start” in life. After all, insurance is expensive. It is very important to note that you must notify the insurance company that the car is being garaged at a new or different location. Failure to do so will result in a voidance of the policy completely and you will have had a theft or accident without insurance. This is a nightmare. Yet, this happens all the time in the State of Michigan.

If and when an insurance company learns that a car was stolen from a location that is different from the location where the car was supposed to be kept, this will raise a red flag in the insurance company’s mind and an investigation will begin. This also commonly happens when a automobile accident happens, and the drivers license of the person who is supposed to be living at your home address now has a new address. This is another way a red flag is raised.

For a Good Reason

Regardless of whether it is true or not, insurance companies will then claim fraud because of the fact that your original insuring address is a safer location than your new address. The insurance company will say that you fraudulently maintained this policy knowing that you had moved and failed to notify your  insurance company (in violation of your policy terms and conditions which are mailed to you once per year by your insurance company) and your claim will be denied. Most insurance policies say that you must notify your insurance company within 30 days of the change of address. Failure to do so within the 30 days will result in, once again, a voidance of your insurance policy.

Always at a Bad Time

Of course, your insurance company will not notice you have moved until after a loss happens. This leads to tragic results. If your car is stolen, you will have no recourse against your insurance company for replacement and/or the payoff of your loan. If you have had an automobile accident, you will be without recourse for the damage to your vehicle, as well as your medical bills, wage loss, and help around the house. Additionally, you may be prevented from suing the other driver if it is determined that you were the owner of a vehicle that had no insurance at the time of the accident.

Lesson Learned

It may start off as a smart decision to add your son, daughter, or family member to your insurance policy. However, life changes quickly and insurance policies must change at the exact same time. Do not under any circumstances try to ever move locations without changing your insurance policy. Also, always make sure your son or daughter is listed as a principal driver on the vehicle that they principally drive in your household.  You may pay a little more for the truth but the alternative after a theft or accident can be tragic.

Take The Next Step

If you have been injured in an auto, truck or motorcycle accident, call 855.65.CRASH or go to to get Michigan’s best personal injury team.

Hire the best personal injury lawyers in Michigan

Femminineo Law, PLLC is Michigan’s finest personal injury firm. He has succeeded in recovering hundreds of millions of dollars for victims of highway accidents, medical malpractice, slips and falls, and for wrongful death matters throughout the State of Michigan.

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