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How Auto Insurance Companies Can Avoid Garaging Misrepresentation

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For auto insurance companies, protecting their bottom line is paramount to ensure successful operations and fair premiums for their policyholders. Which is why understanding garaging misrepresentation, one of the main issues plaguing these companies and costing close to $2.9 billion*, is vital in order to craft effective strategies to combat it.


What is Garaging Misrepresentation?


Garaging misrepresentation or garaging fraud is a form of insurance fraud (intentional or not) that is defined by a misstated garaging address that’s listed on their policy. Where an individual’s vehicle is normally stationed overnight is the garaging address location.


The reasons range on why a policyholder would misstate their garaging address from a simple mistake like forgetting to update their garaging address after moving or intentionally stating the wrong address to try and get a lower premium. 


The Impact of Garaging Misrepresentation


The consequences of garaging misrepresentation extend far beyond minor discrepancies:

  • Inaccurate Premium Calculations: When determining the premium to set to policyholders, crime rates, traffic density, and regional repair costs all come into play as risk assessment factors and typically vary by location. Missated addresses can warp these assessments causing miscalculated premiums that can compromise the integrity of the pricing structure.


  • Financial Losses for Insurers: False garaging addresses cause a decrease in revenue for insurance companies due to artificially lowered premiums. With less money coming in, this affects their ability to successfully cover claims and jeopardize the insurer’s stability.


  • Higher Premiums for Honest Policyholders: Insurance companies can oftentimes raise premiums to all their policyholders to make up for the loss from fraud/misrepresentation. Honest policyholders end up bearing the weight of these subsequent premium increases, leading to disgruntled or even total loss of a customer.


Identifying Garaging Misrepresentation in Insurance Claims


Insurers have several ways to identify garaging fraud in insurance claims at their disposal:

  • Tapping Multiple Data Sources: Having a 360-degree view of a claim is important when there is reason to believe garaging misrepresentation is occurring. Many SIUs will want to acquire detailed vehicle data, social media posts, and much more to find out where a vehicle is really being garaged.


  • Field Investigations and Inspections: If there are significant discrepancies, in-person field investigations and inspections can be effective in validating the garaging location.


  • Policyholder Interviews and Questionnaires: Engaging with policyholders directly, with interviews and questionnaires paints a picture of their garaging habits, unveiling inconsistencies or false information.


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How to Avoid Garaging Misrepresentation


Preventing garaging misrepresentation requires a multi-faceted approach, combining technology, education, and robust processes:

  • Enhanced Verification Processes: Insurers can ensure accuracy and integrity of a given address by putting in place tough verification processes around application and renewal phases. Examples of this include requiring proof of address through credit card statements or utility bills that can be assessed via third-party data sources.


  • License Plate Recognition Technology (LPR): DRN’s License plate recognition cameras have proven to be a successful garaging fraud detection tool by comparing where a vehicle has actually been seen versus the self-reported given address through clustered vehicle sightings captured. This technology can also be incorporated into an insurer’s regular policy review process when they look up a vehicle’s plate number to check the policyholder’s garaging address and make adjustments when necessary.


  • Telematics and GPS Technology: Keeping privacy laws in mind, telematics and GPS tracking can be utilized to monitor vehicle usage and garaging locations, providing real-time data on where a vehicle may be hiding.


  • Education and Communication: Educate policyholders about the importance of providing accurate information and the severe consequences of misrepresentation. Clear communication can deter individuals from providing false information and encourage honesty. Preventing garaging misrepresentation in underwriting starts with informed policyholders who understand the impact of their actions.


  • Incentives for Honesty: In order to cultivate a sense of honesty and transparency amongst policyholders, offering incentives for honesty in the form of discounts for providing up-to-date information or using telematic devices encourages customers to be truthful.




Addressing garaging misrepresentation fosters a bond with customers and manifests a more secure and equitable insurance landscape. Implementing the strategies listed in this blog to deter garaging fraud will assist in maintaining fairness for policyholders, stabilize premiums, and safeguard the bottom line of insurance companies. The future of the insurance industry is in our hands and is reliant on our ability to combat insurance scams with full force utilizing the tools available to us.

Source: Smart Car