Parents be wary - 'fronting' is car insurance fraud
Many parents are unknowingly committing motor insurance fraud by ‘fronting', according to research from the Motor Insurers' Bureau (MIB) and Aviva. Worryingly, more than two-thirds (70%) of UK drivers do not understand what it means to ‘front' an insurance policy and of those that do, only one in five admit to misleading their insurer and committing this kind of motor insurance fraud.
Parents insuring cars under their own names to reduce premiums when their son or daughter uses the vehicle the most, is a common example of ‘fronting'. Not only is this illegal, but declaring false information will mean that when they actually need to make a claim on their policy their insurance is invalid, making initial "savings" a false economy. Young drivers have the highest proportion of insurance claims, accidents and fatalities on the roads, which is why their insurance costs more. Without the correct insurance, the policy holder and driver run the risk of incurring additional costs, penalties, fines and even prosecution.
The research 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. It also indicates 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 lot 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 who is responsible for damages in the event of an accident. 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. 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.
West continues: "Insurance is about peace of mind and knowing that the cost of your liability on the road is covered. If 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."
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.