Parents potentially committing insurance fraud

17 per cent of parents are insuring their child's car in their name in order to reduce costs, according to recent research conducted by Gocompare….

17 per cent of parents are insuring their child's car in their name in order to reduce costs, according to recent research conducted by Gocompare.com.

The practice is known as fronting and is a common type of insurance fraud. It's often carried out unintentionally, but could still leave parents with a criminal record. This is when parents take out the policy in their own name with a child as a named driver, even though the child is in fact the primary driver of the vehicle.

This seemingly innocent practice is in fact illegal and the financial and legal consequences of being caught are serious for both the parent and child. 

The survey found that 17 per cent of parents are already using this method to save money on insurance premiums, while a further 36 per cent admitted that they would consider doing so in the future.

Matt Oliver, Gocompare.com's car insurance spokesman, commented: "Car insurance for young drivers can be expensive and it’s only natural that parents want to help their children get on the road. But, lying to their car insurer is absolutely the wrong way to go about it and could have serious consequences for both the parent and child."

If this type of fraud is exposed, insurers have the right to cancel the policy, which will make it more difficult and expensive to get cover in the future. In addition, they have the right to refuse to pay out for claims, while any driver would effectively be uninsured and risk being fined and having penalty points added to their drivers licence.

For young drivers this could be a particular issue, because if a newly qualified driver accumulates six or more penalty points within the first two years of passing their driving test (including any points acquired before passing their test) their licence will be revoked automatically. To regain their driving licence they must reapply for a provisional licence and may drive only as a learner until they pass a further driving test.

While this seemingly simple act has been undertaken in an attempt to save money, it could in fact end up costing substantially more.

"As well as being illegal, fronting is a false economy. Insurers are wise to the practice and many price policies according to the age of the youngest named driver. However, there are many legal ways for young drivers to find more affordable insurance including shopping around for the best value deal, considering a telematics based policy or opting for a higher policy excess.  In the long run, it is better for young drivers to hold insurance in their own name to build up valuable no claims discount," Mr Oliver stated. 

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