Your Policy is a Legally Binding Document
When you agree to an insurance policy, you are entering into a legal contract with the insurance company. You should read it carefully, and be aware of your responsibilities, as well as your insurance company's. Your policy should clearly state under what circumstances you are covered, or not covered. For instance, you will probably not be covered if your car is insured for personal use and you drive it for work purposes. Or if someone who is not on the policy drives, they won't be covered. If you lie about the circumstances under which you are making a claim, you are breaking your contract, and the law!
Your Premium is a Reflection of your Risk
When an insurance company agrees to insure you, they make an assessment of the risk associated with your policy. Many factors go into this assessment, not just your driving record, but where you live, your gender, age, and where and how much you will drive your car. When your premium is calculated they ensure that statistically, averaged over many policies and claims, they can afford to provide all their customers with coverage.
Car insurance is expensive because replacing and repairing cars is expensive, and so is medical treatment. Some may find it tempting to lie about their circumstances in order to lower their premiums, or make an illegitimate claim. So easy to say you weren't driving your car for work purposes, if you weren't covered for it. But driving a car for work increases the risk of an accident, and means the insurance company is undercharging you. When insurance companies undercharge for insurance, or pay off illegitimate claims, they lose money.
Everyone Pays for Scams
Insurance companies do not have deep pockets to pay for illegitimate claims. They are businesses like any other, and if their expenses go up, the only way they have to balance their books is to raise their rates. This affects every customer. That means that a small portion of your premium is probably going to have to pay for someone else's insurance scam. That's why insurance companies are diligent in making sure that every claim is legitimate. They are protecting their honest customers by ensuring that every claim is valid. When someone scams an insurance company, they aren't scamming a nameless faceless business entity; they are really scamming their friends and neighbors.
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