Most people assume that a farm vehicle is a tractor, truck , trailer or other type of equipment used in agriculture. While this is true, farm vehicles can also be pick up trucks or cars that are owned by a family agricultural business, but primarily used for personal transportation. Farm vehicles enjoy a discounted rate since they are considered low risk due to their rural location.
The Farm Vehicle Discount
Since vehicles which are primarily used on farms are at low risk for accidents or damage, they enjoy as much as a 20% discount over other personal vehicles. Personal vehicles owned by farming families may also receive a discount, but not as much as for vehicles that are used primarily in the business operation. The discount is so attractive that recent attempts have been made by dishonest car owners to claim their luxury class vehicles as farm vehicles for insurance purposes.
Catching the Frauds
Quality Planning is a San Francisco based company that verifies policyholder information for insurers. They investigated 80,000 cars claimed as farm vehicles and found that 8% were located in areas where less than 1% of residents were involved in agricultural businesses. While these dishonest drivers claim their luxury rides are farm vehicles, drivers who don’t seek to defraud insurers are paying extra premiums to cover the extra company expenses.
It Could Cost Big
It is illegal to lie to an insurance company and if a lie is such that the insurance company would not issue the policy if it knew the truth, it is called a material misrepresentation. A material misrepresentation is grounds to void the policy and deny coverage in the event of a claim. Even if the company opts not to cancel the policy or deny coverage, they can charge the correct rate back to the inception of the policy, leaving some of these cheats owing hundreds of dollars in unpaid premiums.
While sometimes the insured person comes up with the idea for this fraud on his or her own, there are agents who suggest claiming the farm vehicle discount as a way to save money on premiums. Drivers should be aware that the discount is only intended for vehicles that are actively involved in a farming business and those claiming the discount who are not qualified to receive it can find themselves without insurance coverage or with a hefty bill for back premiums. Although companies may not press charges, insurance fraud is a crime.
Who Can Claim the Farm Vehicle Discount?
Only individuals that are actively involved in the business of farming can claim the farm vehicle discount and in many cases, personal vehicles are added as a supplement to the policy and charged a higher rate. Pick up trucks that are used on the road may be claimed if they are also used to haul trailers or pull equipment on the farm. If the primary use of a vehicle is personal transportation, the rate is usually higher even for those who actually own farms.
There will always be those who try to claim discounts they are not entitled to, but with the internet it is becoming easier for insurers to track down those who lie on their insurance applications. Farm vehicle discounts are intended for working vehicles that are used in an agricultural business and claiming a luxury car is a farm vehicle can end up costing the policyholder who tries it.
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