A warning has been issued about using the illegal practice of 'fronting' when it comes to insuring cars.
It comes after researchers claimed more than half of young drivers it surveyed were using the practice as they struggled with the high costs of being a car user, including paying for high fees for insurance, which for first-time drivers are often £1,000-plus.
'Fronting' is the name given to the practice when an experienced, older driver says they are the main driver of car when they are not. They then tell their insurance company that a younger driver, usually a son or a daughter, is a 'named driver'. But in fact it is the younger driver who uses the car the most - so the practice is illegal, say insurers. Parents often do this to help their children foot the high costs as it can make insurance cheaper, say researchers from comparison website Gocompare.
This regularly happens when parents, who own their own car, buy a child their first vehicle when they pass their driving test, say researchers.
Now Sindy Pal is the customer service manager at the Swadlincote branch of Swinton Group in High Street, an insurance company which offers coverage for cars and vehicles and she says fronting is strictly not allowed.
She said: “You should only ever include a named driver on your policy if they are not the main driver of your car. If you are the main driver but get someone else to claim that they are, this is called fronting and is not allowed.
“For example, if a young person were to put their parent down as the main driver in order to get a cheaper premium, then their policy could be cancelled and they could be prosecuted for fraud.”
Here are the main reasons of why people do it, brought to you from our sister title, the Manchester Evening news.
So, why do people front?
The honest and simple answer is to save money. Younger drivers and those who are of a high risk often pay a lot more for their car insurance than those older or judged to be of a lower level of risk.
This can be due to more claims being filed and the claims themselves costing more money. So, as a result some try and reduce those costs by fraudulently setting up their policies in the name of an older or lower risk driver.
Can it get you in trouble?
Basically, 'fronting' is a type of fraud - which is illegal and can land you in hot water. ActionFraud handle 'fronting' as a type of insurance fraud and explain that those caught doing it can face prosecution for fraud, potentially leading to a criminal record being given to those found guilty of doing so.
Why has fronting increased so much?
According to a survey from Gocompare.com , 49 per-cent of people believe that premiums for young drivers are far too expensive and generally not fair. With 38 per-cent even claiming that high prices were pushing motorists in this group to tackle the roads without any insurance at all.
A spokesman from Gocomplare.com told Manchester Evening news that: "Insurance premiums for new, inexperienced drivers can seem high and people are often surprised at how much they are compared to the value of the car they're insuring.
"However, for insurers the cost of replacing the car is small compared to the potential cost of other elements of claims involving younger drivers, such as personal injury claims for passengers and injuries and damage caused to third parties and their vehicles.
"Unfortunately drivers aged 17 to 20 are twice as likely to make an insurance claim as other drivers and their claims can cost three times more. Although it's understandable that a parents would want to help their child with the cost of getting on the road, insurance fraud is not the best option.
"Insurers look closely at their customers when they make a claim and there's a good chance that any 'fronting' will be uncovered if parents do have to claim on the policy.
"If found out the policy may be invalid and the child may find themselves liable for all of the accident costs and the parent may find themselves in court and unable to get insurance in the future."
What if I take the risk and get caught?
Filing for a claim on a fronted policy can result in the claim being rejected. Though your insurer would legally have to pay out still for any third parties involved, they could refuse to pay out for your costs, whether that is damages to the car or injury costs.
This is without mentioning the fact that fronting is a type of insurance fraud – which is illegal, and means you or the main user of the car could find yourselves in court.
A criminal conviction could potentially affect application for any type of insurance and any future credit applications that you may submit.
How can I get cheaper insurance, legally?
If this is the first time that you are looking for an insurance policy, or you are trying to beat your renewal quote or searching for the right financial product. Then Gocompare.com are there to help.
This works with trusted insurance providers, financial services organisations and partners to provide a real breadth of coverage across the marketplace.