An insurance fraud you may be involved in without knowing that could give you a criminal record

New statistics are revealing that almost half of drivers believe that a form of fraud which can secure cheaper car insurance for younger drivers is acceptable.

Unbeknownst to most drivers, they are engaging in a fraud which is known as “fronting.”

Fronting, believe it or not, is most often committed by parents who insure a car in their own name and add their child on the insurance as a ‘named driver’ but it is the child who drives the car most of the time.

According to a new study conducted by AA Insurance, almost half of motorists who were surveyed (49%) said they felt there was nothing wrong with doing this to save money and the rationale was that premiums for young drivers are so high and prohibitive.

Although many insurance companies will find it hard to track or monitor this kind of fraud, all the same, if you're caught you could be in serious trouble.

There is no doubt about it, car insurance premiums are exorbitant for younger drivers and engaging in fronting can be a huge temptation for parents in their attempt to help their children but it may be something to think about.

Here’s why things could get very expensive and legally costly in the long run.

The insurance director of the AA, Michael Lloyd, pointed out: “A quarter of young drivers (23%) aged between 17-24 will have a crash within two years of passing their driving test thanks to a combination of youth and inexperience.

"They are also much more likely to be in collisions that involve death and serious injury.

“That’s why their first couple of years’ premiums are so high.”

As a result of the very high premiums for young drivers, the car industry reckons it uncovers around 1,000 cases of fronting each year.

When your insurance company finds out that you have been fronting for an inexperienced driver, there can be serious consequences.

The insurance company can cancel the policy from its inception. Basically, it is like your insurance was never in place.

If there is an incident, with a third-party affected, the insurer will still have to hand over money compensation but they can still pursue your family for the money and these costs could be very substantial, particularly if there are any injuries involved.

Along with this and even more worrying, there is the possibility of being prosecuted for fraud, with a criminal record resulting.

If this happens, you will find it a lot harder to get insurance in future and it will damage your chances of getting all forms of financial products, from credit cards to mortgages.

A lot of the time, the insurance company will pursue the fronting family for the costs but in many cases, it can’t recoup the money as the families will just not have it.

Insurers are claiming that as a result of ‘fronting’, everyone’s premiums are bumped up as insurers look to guard themselves against future fronting cases.

It is true, that insurance for young drivers is terribly expensive and almost prohibitive but there are some other ways to reduce that cost which come with the risk of gaining a criminal record.

For example, black box insurance policies are increasing in popularity with young drivers. These are sometimes known as ‘telematics’ policies.

It involves a box being fitted to your car which monitors your driving style and if you keep to the limits set out by the policy you can demonstrate that you are a safe driver, which can bring your insurance premium down.

Author

Justin Kavanagh
Justin Kavanagh is a recognised leader in automotive intelligence and vehicle data supply to the entire motor industry. He has almost 20 years experience in building systems from the ground up. As the Managing Director of Vehicle Management System, he understands the need and importance of trustworthy and reliable vehicle history and advice to both the trade and the public.
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