Drivers risk invalidating insurance by ‘fronting’
More than two-thirds (70%) of UK drivers do not understand what it means to ‘front' an insurance policy and of those that understand what fronting is, there are one in five who admit to misleading their insurer and committing this kind of motor insurance fraud, according to research from the Motor Insurers' Bureau (MIB) and Aviva.
Insurance ‘fronting' occurs when someone other than the main driver of a vehicle is incorrectly declared as the policy holder. An example of this would be a parent insuring a car and declaring themselves as the main driver in order to reduce the insurance premium, when in fact their son or daughter will be the main user of the vehicle. By doing this, motorists are committing fraud and under contract terms, could invalidate an insurance policy.
The research, which forms part of MIB's Stay Insured campaign and is aimed at drivers who may be vulnerable to driving without adequate insurance during the recession, also indicates that there is a disconnect between drivers' perceptions of fronting as a "white lie" versus the reality of it as a legal offence:
More than a third (35%) of drivers justify 'fronting' as being a loophole in the law
One in ten (10%) believe that ‘fronting' is a legitimate way of obtaining cheaper motor insurance
And only a third (30%) of motorists were able to correctly define the term 'fronting‘
When presented with a definition of the term fronting 94% of those surveyed deem fronting an insurance policy to be socially unacceptable.
Ashton West, Chief Executive of MIB said: "There is a significant degree of confusion amongst drivers about the importance of giving accurate information about the main driver to an insurer. There is a need to help drivers understand and appreciate the importance of being adequately insured."
A costly "white lie"
The research also highlights confusion over responsibility for damages in the event of an accident. Under a valid insurance policy, the insurer will cover the policyholder's liability for injury and property damage for any other parties involved and if the cover is comprehensive, the damage to the policyholder's own vehicle. However, a third (31%) of drivers wrongly assume that they will be covered if the policy is 'fronted‘. In fact, where it is proven that a policy has been ‘fronted', insurance companies can refuse to pay out damages to the "insured" vehicle and may look to recover third party claim costs from the policyholder or driver.
West continues: "Insurance is about peace of mind and knowing that the cost of your liability on the road is covered. In the event that the driver of a fronted policy is involved in an accident, both the policyholder and the driver could be open to additional costs, penalties, fines and - potentially - prosecution. It simply isn't worth the risk. There are a number of hints and advice about how to stay insured legitimately at askmid.com."
Nigel Bartram, motoring strategist at Aviva added: "Young drivers remain the age group with the highest proportion of insurance claims, accidents and fatalities on our roads, and this fact is reflected in their motor insurance premiums. Well meaning parents may consider fronting an insurance policy to try and save money, but this is false economy as those that try to cheat the system by declaring false information will find that their insurance is invalid when they actually need to make a claim on their policy.
"When parents are fronting up a young driver's policy it means the young driver is not fully declared and will not be able to accrue any no claims bonus of their own. It is important that insurers are covering the appropriate risk with the correct premium; otherwise this premium will have to be borne by other, honest customers."
Aviva's top tips for reducing premiums:
Choose wisely - a smaller engine vehicle without modifications means lower premiums
Think safety - parking in a garage at night and fitting alarms and immobilisers will help drive down costs
No claims quickies - some insurers offer rapid bonus schemes that let young drivers earn a full year's no claims bonus in as little as six months
Be online savvy - many insurers offer a discount if you buy directly with them online
Keep it brief - if you use the car infrequently, agreeing to a mileage limit can help keep premiums down
Pass Plus - Pass Plus passplus.org.uk is a training course for new drivers designed by the Driving Standards Agency in consultation with the industry. There's no final exam to pass but drivers could get up to 10% off their insurance if they take the course.