All of us are aware that lies will lead us into trouble, especially when money is involved. One good example is lying or omitting necessary facts to get good, lower-priced insurance premiums.

Insurance companies ask a lot of questions during your application; some related to your income and financial status, some seem to be veering on personal details. Some questions, whose answers dictate the price you’ll pay for insurance, can give you the chance to save money from price reductions and discounts. You want to be in the best position and provide the answer they’re looking for.

This is where those little white lies and “sins of omission” are spoken. The golden rule is high-risk clients receive higher, more expensive premiums. People, who are aware of breaking the deal with the truth, often exaggerate and/or withhold some shady information to (1) get approved of the policy, (2) get a lower premium, and (3) get more money in a claim settlement.

Lying on insurance forms, whether you get caught or not, can come back to haunt you. Below are the most common lies insurance companies are used to hearing and their consequences.

Home Insurance

“I don’t possess any life-threatening property”
Any property that can cause potential danger to the household and increase the owner’s liability risk need to be disclosed and insured.

Depending on the insurance company, additional costs may be required if your home has a wood burning stove or a fireplace. These equipment heighten the chance of property damage due to fire, thus increasing the home’s risk levels. Some insurers also have rules around backyard pools, tree houses, and trampolines. You may need some extra coverage added to your policy to cover them.

“I don’t have a dangerous dog”
Dogs, regardless of breed, are majestic creatures. However, we cannot deny the fact that they have the tendency to harm and one single bite can be fatal. Not intended to discriminate but there are certain “bad breeds” blacklisted by insurance companies, including Rottweiler and Pit Bull. If you lie about having a dog, then you’re gonna have a big problem should you file a claim.

“The property is purely residential”
Do you rent the property out to tenants? Do you sign up with home sharing programs like Airbnb to generate income? Or do you simply leave the home vacant for long periods of time? Home insurance is designed primarily for private residences. A home that isn’t used as such creates an issue with your home insurance policy.

“No improvements were done to the home”
Repairs, renovations, and improvements should be declared to make sure your policy is able to cover you accordingly. The company may ask a few basic questions about the work done and how drastic it was.

Auto Insurance

“No damages on the vehicle”
Like home improvements, any pre-existing damages on vehicles, the repairs done as well as the equipment you upgraded should be reported.

“There are no other drivers”
You should be very clear about who the primary driver is, and who, apart from the primary driver, use the car. Putting a car under one person’s name when he or she isn’t the main driver is problematic for your insurance.

“The vehicle is used properly”
How far is the distance of your home to your work? How often do you drive it? What is the purpose of the car? Is it for personal use or for business use? Where do you keep the car at night? Do you have a personal garage? These are factors that affect the insurance rate, and therefore should be accurate.

“I don’t have violations and penalty points”
A stain on your driving record means insurance surcharges. Minor moving violations like speeding and failure to comply with traffic regulations are classified as misdemeanors and are given higher premiums. Drivers with a history of serious moving violations including hit and run, driving under the influence, and road rage, on the other hand, are often denied.

Health/ Life Insurance

“I don’t do vices”
Vices like smoking, drinking, and prior or current drug use should be stated. Bad habits sure lead to higher premiums or even to the rejection of the insurance application. However, an untruthful applicant who doesn’t disclose these details could be put in a worse situation. A company may order a medical examination during the application process. Your height, weight, BP, and blood, urine, and hair samples will be checked to assess a history of drug, alcohol, and tobacco used.

“My medical history is clean”
Same with vices, past and current medical conditions, and family history of such disorders lead to higher premiums or declining of application. By hiding them, you may think you’ll be able to get the desired insurance coverage at the most favorable rate. Wrong. You’ll end up claiming less and paying more out-of-the-pocket costs.

Consequences of Lies and Omission

1. You’ll face higher insurance premiums. Your insurer is likely to discover the hidden information, and approve your policy with the higher premiums you’re trying to steer clear of. Your insurance rates may also increase.

2. You’ll get denied of your application. If they find out your statement contains multiple lies and missing disclosures, the company will use their right to decline your application entirely.

3. It will reflect on your records. The consequences extend in the next few years. You may be denied coverage in the future or be faced with higher premiums.

4. Your insurance policy may get canceled. The false declaration can make the insurance contract null and void, keeping you from claiming and receiving the benefits.

5. Even your death benefit can get canceled. Even after you perish, you (and your loved ones) will still suffer the consequences. The company may either reduce or completely remove your benefits should they discover the lie after your death.

Author Bio: Carmina Natividad is a resident writer for Insurance Adviser, one of the largest and most credible general insurance businesses in Australia and New Zealand.