Why does insurance want to know how much I purchased the car for? How do they use this info?

I just purchased a used car and started to add insurance on it with Wawanesa Insurance. Right off the bat the representative asked me how much did I purchase the car for. I would like to know if they base my premiums based on how much i purchased the car for. Lets say I purchased a car for 10,000. If I told them I purchased the car for 5,000 would the Premiums be less but if i total my car would they only cover $5000 or would they go by KBB, current market value..ect ect ? Are insurance companies required to share this information with anybody?



Thank youWhy does insurance want to know how much I purchased the car for? How do they use this info?
depends on the year of the veh, if the car is old like 1989 or older it will probably need to have a stated amount (cost new), if it has a salvage title they might ask you for the stated amount, of if you want to have a stated amount.....yes they will rate you based on the info you provide so just be honest with themWhy does insurance want to know how much I purchased the car for? How do they use this info?
I've never had an insurance agent ask me that. I'd be careful.

mbusa