Lying to your insurer or intentionally omitting certain details might seem harmless. After all, is it really a big deal not to mention that you occasionally use your car for business purposes or that you’ve underestimated the value of your belongings? In reality, a false statement can have serious legal and financial consequences. Here’s why being transparent with your insurer, insurance agent, or broker is not only a legal obligation, but also in your best interest. 

A Legal Obligation in Quebec

In Quebec, transparency with your insurer is mandated by the Civil Code of Quebec (articles 2408 to 2419). When buying an insurance policy, the insured has a duty to honestly disclose all known circumstances that could influence the insurer’s risk assessment. 

Article 2408 C.C.Q.:  " The client, and the insured if the insurer requires it, is bound to represent all the facts known to him which are likely to materially influence an insurer in the setting of the premium, the appraisal of the risk or the decision to cover it, but he is not bound to represent facts that the insurer knows or is presumed to know because of their notoriety, except in answer to inquiries." 

In other words, even an unintentional omission can be problematic if it relates to a fact relevant to the risk assessment. An intentional lie or omission is even more serious. 

Consequences of False Declarations

1. Denial of Coverage: In the event of a claim, your insurer may deny compensation if it discovers that you provided false or incomplete information when the policy was issued. This applies even if the omission is unrelated to the incident.
2. Policy Cancellation: Your insurance contract could be retroactively canceled, meaning you might be considered uninsured from the start of the coverage period. This could have severe consequences, such as in the case of a car accident.
3. Legal Penalties: Making a false declaration can be considered insurance fraud, which may lead to civil or even criminal sanctions. It can also damage your reputation with insurers, making it harder or more expensive to get coverage in the future. 

Real-Life Examples

• Auto Insurance: You fail to mention that you use your vehicle for commercial deliveries or passenger transport (such as Uber).
• Home Insurance: You’ve converted your basement into a rental unit for Airbnb but didn’t inform your insurer. If a fire occurs, your claim could be denied because the use of the property doesn’t match what’s stated in your policy.
• Life Insurance: If you fail to disclose a known medical condition when signing the policy, the benefit may be reduced or denied upon your death. 

Be Honest from the Start… and Over Time

Your duty of transparency doesn’t end when you sign the contract. You must notify your insurer of any major changes, such as renting out your home on platforms like Airbnb, changing the use of your vehicle or property, adding a driver, and so on. 

In Summary

Lying to or withholding information from your insurer can be very costly. It’s far better to be upfront from the beginning—even if it results in a higher premium in the short term. That way, you’ll have the peace of mind of knowing that you’re truly protected when you need it most.