Some people think that it's acceptable to lie about important facts like accident history, past traffic violation convictions and speeding tickets. Lying to your insurance provider is never a good idea and could lead to a future claim being denied. You could be on the hook for thousands of dollars because you didn't think it was important to be honest with your insurance provider.
At the basis of any insurance contract is the Doctrine of Utmost Good Faith. What this means is that your contract with an insurance provider is intended to be open and honest. Your insurance company, according to this doctrine, will disclose all relevant information about your policy so that you know exactly what you are covered for. In return, a policyholder must disclose all relevant facts to the insurance provider. This is information that helps an insurance provider determine your level of risk and adjust premiums accordingly. When you sign a contract with an insurance company, you are declaring that you will be honest about everything relevant to your policy.
Not only do you have a moral and contractual obligation to be honest, but there are serious consequences if you do not hold to the Doctrine of Utmost Good Faith. You could be found in violation of contract, have your policy cancelled, and even have a claim denied. For instance, if you reported to your insurance company that you are hardly planning to drive your vehicle, and that you may put on roughly 5,000km a year, and then turn around and use it as a commuter vehicle for 30,000 km a year, you could have an accident claim denied. Moreover, you may be denied insurance coverage in the future if you were found in breach of contract. In the most extreme cases, individuals can be fined or imprisoned under the Insurance Act or Criminal Code of Canada for insurance fraud.
Ultimately, contracts are about trust. Regardless of whether you're dealing with a friend or a business, signing a contract means you are giving your word to live up to the terms of the contract. Not only are you at risk of losing thousands of dollars should a claim be denied, but you risk having your word mean nothing.