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Ask the insurance expert

Car insurance in a parent's name?

Monday, 18 Feb 2008 11:10
A reader is worried if she is breaking the law by having her car insured in her mother's name.

Simon Webster, managing director of Facts & Figures Financial Planners and part of our team of Independent Financial Advisers (IFAs) from unbiased.co.uk, offers a helping hand.

Carolyn asks:

My car is insured in my mum's name to keep insurance costs down.

A friend told me this is illegal. Is it true?

My mother does drive the car from time to time, but it is mostly me driving to work etc.

Simon from Facts & Figures Financial Planners replies:

As a matter of law your friend is 100 per cent wrong.

The law states a driver must be insured at least to the level required by the Road Traffic Act (cover to third parties not in your vehicle - as opposed to the more common third party only which covers those both within and without your vehicle), but the law does not stipulate how.

That is a matter of the contract between you and your insurer. Insurance policies are executed on the basis of "utmost good faith" i.e. you must tell the truth when you make your proposal - non disclosure or outright lying will almost certainly invalidate your cover and you will also be open to charges of fraud and/or driving without valid insurance. These are things the courts take very seriously.

My own son is insured on my wife's policy. We were upfront with the insurer and we still saved £500 over the year. As long as you are satisfied you answered all the questions the insurer asked and you did not willfully withhold any pertinent information you will be covered.

I would guess you are a young driver and it worked out for cheaper for you to be on mum's policy than your own. But bear in mind all the time you drive that way you are not generating no claims bonus for your self so when you do get round to taking a policy in your own name it will be at the full rate.

If you have a personal finance question for our team of Independent Financial Advisers (IFAs) from unbiased.co.uk, go to the myfinances.co.uk Ask the Mortgage Expert section.



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