How to avoid car insurance fraud
Fraud is the blight of the UK insurance industry – both for providers and consumers – and it is a sad fact that instances of car insurance fraud, in particular, have been growing rapidly in the past few years. From ‘ghost broking’ to ‘crash for cash’, criminals are frustratingly adept at coming up with innovative ways of defrauding drivers of their hard-earned money.
It is also the case that many people get caught up in insurance fraud cases by, understandably, trying to lower the cost of their premiums. However, as we will see below, there are still significant risks even for the well-meaning parent who is simply trying to make life easier for their child who has just started driving.
Here, we will provide some tips on how to remain diligent in the face of fraud and ensure that you do not become the latest victim – or, indeed, an unintentional perpetrator - of an illegal practice which is having the unwanted effect of pushing up insurance premiums for millions of honest motorists across the country.
‘Fronting’ is the term given to the practice of naming yourself as the main driver of a car when, in fact, you have no intention of driving the vehicle regularly, or at all. This may seem like an innocent enough tactic to lower the insurance premiums of, for example, your son or daughter, but it is classed as fraud and must be avoided.
Here’s some more information about why engaging in fronting, however appealing it might be, is never a good idea, from Simon McCulloch, director at insurance comparison experts comparethemarket.com:
“While car insurance fronting may be tempting for some, it’s important to remember that it is likely to be deemed as fraud. By doing so, you’re essentially misleading your insurer, and this can result in some serious consequences. At the bare minimum, your insurer could refuse to pay some, or all, of your claim should something happen, but you could also face points on your licence, or even a ban, while the main driver could also face penalties such as being taken to court for car insurance fraud.
“It’s worth remembering that penalty points and driving convictions can stay with drivers for years and can really have an impact on the cost of premiums. In summary, always answer insurance questions openly and honestly – any small saving in premium just isn’t worth the risk.”
Failing to declare convictions
Simon was also on hand to tell us more about the even riskier temptation that some drivers have not to declare any convictions they may have previously picked up on the road. As he explains, this could have serious consequences, including being banned from driving altogether:
“Receiving penalty points can be a nightmare for drivers, but while it may be tempting to cover these up to avoid a higher premium, failing to declare previous convictions to your insurer can land you in hot water. It’s important to remember that deliberately withholding relevant information from your insurer could be considered to be fraud, which could see you facing graver consequences than a higher premium. Not only could you face invalidating your cover, but in the case of an accident, the deception could see you face extra points, a hefty fine or even a driving ban from the police.
“You should always make sure to take extra care when looking for car insurance and declare all relevant information accurately and honestly, including driving offences committed.”
Another type of insurance fraud that has been growing with alarming speed over the last few years is that of ‘ghost broking’. In the case of this kind of fraud, the driver is an innocent party and is taken advantage of by an unscrupulous individual or group masquerading as a bona fide insurance broker.
So-called ghost brokers sell what seem to be great car insurance deals to unsuspecting consumers, but are breaking the law in one of three ways:
- The insurance documents they hand to the driver who has ‘purchased’ a policy through them could be completely falsified.
- The ‘broker’ could purchase a genuine policy on the driver’s behalf but through the use of false details, therefore artificially bringing down the price.
- The policy – and the documents – purchased can sometimes be genuine but then be cancelled during the minimum 14-day ‘cooling-off period’. The fraudulent broker would then keep the money spent on the policy, whilst the driver would be left with no cover.
According to Action Fraud, the national fraud agency, victims – often young males who are approached via social media – lost an average of over £750 in the 850 cases that were reported in the three years to October 2017. There are, however, some relatively simple steps you can take to ensure you do not become a victim of ghost broking – many of which are just common sense:
- Ghost brokers often advertise their services in untraditional places for promoting insurance sales, such as pubs, garages, newsagents and notice boards.
- If your broker is only making contact via messaging apps such as WhatsApp or only has a mobile phone number, this should ring alarm bells immediately!
- A number of quick online checks can be made to prove their veracity: find out if your broker is listed with the Financial Conduct Authority and on the British Insurance Brokers’ Association website, or if your car is legally insured on the Motor Insurance Database website.
- And the golden rule – if it looks too good to be true, it most likely is!
Crash for cash
Whilst ghost broking is thoroughly dishonest and unquestionably illegal, the notorious practice known as ‘crash for cash’ goes one step further and can actually endanger people’s lives.
It is likely that you have heard of crash for cash scams before – they are when another driver (usually a career criminal involved with an organised gang) deliberately causes a collision with another vehicle in order to then make a fraudulent insurance claim, often exaggerating the extent of the damage to claim on car hire, recovery costs, personal injury and more.
Becoming a victim of crash for cash can have serious physical, emotional and financial consequences, especially when you consider that criminals tend to target parents with children on-board and elderly drivers. Vigilance is vital to stop this practice spreading further, so we were very pleased to hear from the City of London Police on the matter, who were able to share some tips about how to avoid becoming another crash for cash statistic.
Firstly, though, Detective Chief Inspector Andy Fyfe, Head of the City of London’s Insurance Fraud Enforcement Department, explains crash for cash in more detail, and what the police are doing to stamp out this appalling practice:
“Fraudsters involved in ‘crash for cash’ fraud have no consideration for the consequences of their actions and place financial gain above all else. Not only do they put the safety of innocent people at risk in a bid to make money, but they also cause financial harm to the insurance industry, driving up the cost of insurance premiums for all motorists.
“The Insurance Fraud Enforcement Department have investigated a large number of ‘crash for cash’ cases since its inception in 2012, and by working together with the insurance industry, we will continue to catch these criminals and ensure they’re brought to justice.
“It’s also vital that we keep warning people about this type of fraud – we have advice on our website for motorists to help them avoid being the victim of a staged collision.”
Below, you can find the City of London Police’s detailed advice for avoiding becoming involved in a crash for cash incident:
Ways to Avoid Being the Victim of a Staged Car Accident
Keep your distance
“Keeping a safe distance will reduce your risk of running into the back of somebody, by allowing a greater stopping distance. Make sure you can see the tarmac below the tyres of the vehicle in front.
Beware of tailgaters
“By forcing you to concentrate on the car behind, the criminals will attempt to take your eyes off the car in front of you. The car in front is ‘in on the act’ and will likely brake suddenly, forcing you to hit the back of them, because your concentration was on the vehicle behind.
Always look for brake lights
“Non- functioning lights can be a ploy to trap unsuspecting motorists. Take extra care in traffic until you are certain that the vehicle in front has fully operational brake lights. If a car looks to be slowing quickly and the brake lights are not illuminated, give that particular vehicle plenty of room.
Take extra care at roundabouts or areas where there is stop-start congestion
“Hectic roundabouts, especially at rush hour, can be an ideal opportunity for induced accidents. A typical example is where there is a gap and you are keen to follow, the car in front suddenly brakes and you follow – into the back of their car. Try not to rush at roundabouts and be wary of what the car in front is doing.
Beware of cars rapidly pulling out of junctions and then braking in front of you
Be extra aware if you are a commercial vehicle owner
“Commercial vehicle owners are targeted as there is a high probability of the vehicle being fully insured and a company may be less likely to contest a claim. One scam involves two cars and a larger commercial vehicle. A car will drive in front of the commercial vehicle, and the second car will intentionally sway into the path of the car, forcing it to brake and the commercial vehicle to go into the back of the car in front.
Take extra care when in lanes
“Motorways and dual carriageways always require drivers to be extra diligent, but it is always worth being conscious of the middle lane. A car can deliberately pull from the outside lane (fast lane) and cause you to swerve into another car.
If you have been involved in an accident and hit the back of another vehicle, then do not panic
“If you are remotely suspicious then be as vigilant as possible. Report the incident in detail to the police as soon as possible, think about taking photographs of vehicle damage (as damage may be done to the vehicle after the event to make it look like the impact was much higher, thus allowing for a greater compensation claim as more damage was caused) and take the full details of the other party. Let your insurer know that you believe the accident was caused deliberately, and tell them why you think so.”
It is important to remember that only a tiny minority of UK drivers are the kind of people who would be willing to countenance defrauding another motorist, and the slim possibility of being involved in such an incident should in no way deter you from heading down to your nearest Ford showroom and getting out on the road!