In most areas large portions of your auto insurance bill is to pay for fraud. When you think about fraud most time you conjure up images of the guy staging an accident and wearing a neck brace to court. Often times insurance fraud is just lying to your insurance company about something simple, like the location your vehicle is primarily kept.

Insurance companies use this information to charge the right rate for the risk. If you get a lower rate by lying about a key fact in determining your rate, it does not change the risk. The claims pay out is the same. Therefore, the unassigned risk must be charge somewhere else.

All the honest people are paying for it. Whether it's one guy defrauding $100,000 from the insurance company in a staged accident or 1,000 people defrauding $100 by lying about their address, it's $100,000 someone else has to pay for.
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