How to avoid car insurance fraud
By Kate Saines
We’ve all heard the stories and been amazed at the incredible audacity of the insurance cheats – the people making fraudulent claims and bumping up premiums for the rest of us.
Some of the stories would be funny if they did not impact on us so acutely. Take the case of a claimant who informed their insurer they suffered back injuries from a fall in a nightclub.
The claim was rejected when a search on Facebook uncovered pictures of the person in question performing gymnastics and training for a charity run.
And then there was the man who claimed for a lost engagement ring. Investigations led to the man’s ex-partner who said she had not received a ring and had not even been engaged. The same day the revelation was unearthed, the man said he had suddenly found the ring.
There was even an injury claim from someone who had fallen over a wall. It later emerged there was no wall at the scene of the alleged incident.
These are the fraudulent claims which are exposed and then rejected. And, according to the Association of British Insurers (ABI), which recently published these stories, 2,500 fraudulent insurance claims are uncovered every week, and the number being uncovered seems to be rising each year.
Nick Starling, the ABI’s director of general insurance and health said: “Insurers are working harder than ever to protect honest customers against fraud.”
“The savings made by weeding out fraudulent claims would otherwise end up being paid for by honest policyholders through higher premiums.”
But despite this impressive headway into weeding out the cheats, insurance fraud is still a very big problem.
In fact, it is estimated insurance fraud is costs £2billion a year. And this adds, on average, an additional £44 per year to the insurance bill of every UK policyholder, says the ABI.
But while being caught out exaggerating or faking a claim will mark you out as a fraud to insurers and get you into very hot water, simply ‘cutting a corner’ to reduce your premiums is just as dangerous.
It’s tempting with premiums – particularly for car insurance – to tweak some of the details of our circumstances in a bid to save ourselves some money.
And thousands of motorists, the ABI revealed earlier this year, are putting their motor insurance at risk as well as driving illegally by giving false information or failing to disclose important facts.
Some of these incidents of being economical with the truth might seem innocent, and you might even think they are acceptable ‘money saving’ methods. However, this is sadly not the case.
Take a well-documented ‘corner cutter’ known as fronting. This is where a parent identifies themselves as the named driver for a vehicle, says their son or daughter is an occasional driver but, in fact, their child is the main driver.
According to research by the ABI over half of motorists said they would not rule out fronting – despite the fact it is considered to be fraud, and could invalidate their insurance and lead to a criminal conviction.
The problem is, as subsequent research by Moneysupermarket has uncovered, people are confused as to whether fronting is illegal.
Research by the website found one in ten motoring families had carried out this practice and a fifth of drivers thought it was legal.
Peter Harrison, car insurance expert at Moneysupermarket, said: “Motoring is expensive for younger drivers, with annual premiums for an 18 year old averaging around £1,271.50, so it’s not surprising some motorists would consider it as a way to save money.
“This is a false economy, however, as the costs clearly outweigh the risk of being caught end ending up with invalidated insurance.”
Instead experts at the website suggest young drivers save money by telling the insurer they are the main driver on their car, but adding the older more experienced motorist on to the insurance as a named driver.
Doing this will also allow you to build up your own no claims bonus and therefore lower your premiums in the future.
It’s not just fronting which is a problem for insurers. The ABI’s research found over half of drivers questioned would not rule out exaggerating the number of years since they last claimed.
And 12 per cent said they would be tempted to withhold details of any motoring offences.
Similarly it is also common for policyholders to provide a different address – one in a safer, less crime-ridden area - to an insurer in an attempt to reduce their premiums.
The survey by the ABI found one in ten people would consider this falsehood, along with changing their name, age or occupation, to help cut their premium.
The insurers are becoming increasingly frustrated about the situation, particularly as it is yet another problem which forces them to increase premiums.
Simon Douglas, director of AA Insurance, said: “Customers being economical with the truth when buying cover has led to an unacceptable number of claims being declined, which is usually when false information comes to light.
“Yet insurers are still obliged by law to meet third-party costs even if the policy was fraudulently obtained. This is yet another major contributor to premium inflation.”
Now the message to anyone tempted to commit fraud – however trivial it may seem – is there is no escape. Plans are afoot to clampdown on the fraudsters through a special police force and a ‘blacklist’ of known insurance cheats.
The new force, the first ever police insurance fraud investigation team will be launched at the same time as the national Insurance Fraud Register.
Nick Starling of the ABI said these measures will make it harder than ever to commit insurance fraud. And the steps have been welcomed by the insurers themselves.
Simon Douglas, of AA Insurance, said the special police unit, which will be funded by insurers, would quickly pay for itself since fraud, particularly false personal insurance claims, is the biggest driver of premium increases.
Use the Myfinances.co.uk comparison tables to find the best deal on car insurance.
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