Most insurance companies require that you inform them of all licensed household members. In Florida, the Consumer Auto Insurance Guide put out by the state notes that it is the responsibility of the policyholder to verify that information given to an insurance company is correct and to report any changes, such as a newly licensed child.

Your insurance company will not pay for any loss since your son is a household member and was not listed on the auto insurance policy. If they requested all licensed members of the household to be listed on your application or policy and your son was not, that is what they are deeming this to be fraud and misrepresentation. The insurance company may be investigating this, in order to have the right to deny claim.

In most states this is a serious offense you might need to obtain legal counsel. As for the penalties, they will differ depending on the state in which you live. Typically fines and/or jail time are penalties for insurance fraud (if you are convicted). In Arizona, their Fraud Unit can find insurance fraud violators to be guilty of a class 6 felony. Penalties in AZ can include up to 10 years in jail and/or fines of up to $150,000.

In New Jersey, if an insurance applicant is convicted of knowingly providing false or misleading information to an insurer in order to obtain a policy or reduce the premium they can be fined up to $5000 and face additional criminal penalties.

Check with your state's insurance regulatory body to see what your state's penalties are for insurance fraud due to misrepresentation.