Not all fraud cases involve white-collar criminals and thousands of dollars.

Cutting corners on your home or car insurance may save you money in the short term, but it's actually costing Canadians $3 billion a year in added insurance premiums.

Small-scale fraud is so rampant in Canada that approximately 15 per cent of people's insurance premiums go toward covering bogus claims, Anne Marie Thomas of Insurance Hotline says. She says small-scale fraud can include everything from misrepresenting how often you drive your car to underreporting the number of people who live in your home.

"There are smaller types of insurance fraud that people commit, and you don't even think of it being fraud," Thomas told CTV's Canada AM on Monday.

Thomas says lying to your insurance company breaks the "good faith" agreement you make with the company, and exposes it to risk it doesn't know it's facing.

"For example, telling your insurer 'I don't drive to work,'" Thomas said. "And the truth is, you drive 50 kilometres one way to work."

Insurers share your risk every time you pull the car out of your driveway, Thomas says. Lying about how far you drive may save you a few dollars each month, but it also breaks the spirit of your agreement with your insurance provider.

"Your insurance company promises to pay out any claims that you might have in the event of a loss. In exchange, you promise to be honest with your insurance company," Thomas said. She adds that lying about how far you drive puts more of the risk on the insurance company.

"Your premium doesn't match the insurance company's risk."

The same principle applies to lying about your home insurance. Thomas says it's important to report how many families are living in a household, especially if multiple families are living separately under the same roof. "That is an additional exposure for the insurance company that they should be made aware of," she said.

Thomas adds that insurance companies have many ways of catching people who cheat the system. She says lies often come out when a claim is made, and companies also have ways of discovering unreported speeding tickets and accidents.

Getting caught in an insurance lie can damage your credibility and result in your policy being cancelled, Thomas said.

"It doesn't do to lie to an insurance company," Thomas said.