This is REALLY wrong.
Customers do this A LOT. I see it all the time.
This is what happens at my job all the time:
Insurance prices in detroit are sky high so people somehow get an address in a different city and say they live there. (on a side note, over 1/2 the people in detroit that own cars do not have any insurance at all.)
Hopefully he will get "caught" but most of the time they won't.
Call the ins co. that he is with and inform them that he has never lived here, etc. Fix it because that is just plain wrong.
Or, you could wait until he has a really bad accident and have the ins co. deny the claim beacuse of fraud. thats always fun too!