How to avoid car insurance scams

Whether opportunistic, organised or accidental, fraud can affect all motorists. Car insurance scams are a very real issue with an Insurance Fraud Bureau report finding that 95% of those polled ‘knew little’ or ‘knew nothing’ about insurance fraud.

People who are targeted with fake insurance adverts risk driving uninsured if they buy a policy from these outlets. Penalties for driving without insurance include a potential fine of £300 and 6 penalty points.

There’s also a chance that your vehicle could be seized (even with impound car insurance, this will cost at least £150 for it to be released). You could also face a court hearing where you might receive an unlimited fine and driving ban.

You could also lose some of your money or face a potentially lengthy – and costly – legal process to claim it back.

Insurance fraud is an expensive business and the costs of dealing with it falls on to all motorists through increased premiums.

What is car insurance fraud?

The AA states that car insurance fraud is anything that tries to cheat your insurance provider. This could include:

• Knowingly providing false information for a quote – You may be tempted to embellish some of your details to try and lower your premium but don’t do this.If you lie to your insurer, you could find your policy invalidated, have claims rejected and face additional charges.
• Making an exaggerated claim after an accident – Honesty is the best policy when it comes to reporting any injuries after a car crash. Some people may exaggerate the extent of their injuries to claim more money, but this would be fraudulent and could lead to criminal charges.
• Faked accidents – Some people even try to claim damages for an accident that never happened. The AA states this is most commonly carried out by drivers with already-damaged cars. They’re trying to claim this damage was caused in an accident.

It’s not just drivers who can be fraudulent. If an insurance company knowingly denies a customer a benefit that’s owed, that could also be considered fraud.

Ghost broking

Ghost broking is a practice where illegal insurance intermediaries offer fake insurance for a low price. These policies are not worth the money they are written on and can include:

• False documentation
• Buying a legitimate policy but using false information
• Paying with a stolen credit card

If you use a Ghost Broker, your policy may be cancelled by the provider with no cover deemed to have been in effect and you may be liable for any injuries or damage caused while the policy is in force. Your car could potentially even be impounded. It’s unlikely you’ll get your money back and you’ll also have to buy a new, legitimate policy.

It’s important to know the signs of a Ghost Broker to stay safe and insured.

Ways to spot a Ghost Broker

• Unrealistically low prices – If it sounds too good to be true, that’s likely to be the case.
• Lack of professionalism – Is there something ‘off’ about the website or social media account offering the policy? Trust your instincts if it doesn’t feel right.
• Spelling errors etc – Have they spelt the name of the broker correctly and in the company’s standard casing e.g. if you buy a policy from ‘temp cover’, it’s not going to be from us here at Tempcover.

Fraud costs the insurance industry a significant amount each year, and part of these costs will be passed on to policyholders. By reducing insurance fraud, this could ultimately bring down the cost of insurance for consumers.

If you come across what you believe is a Ghost Broker using the Tempcover name and branding, contact us on [email protected] with the following details:

• The website or social media channel where you saw the policy
• The name and contact details of the person who sold the policy
• Screenshots of documentation and supporting messages
• Information about the bank account you sent money to

Once you’ve done this, our fraud team will investigate the issue and work with industry experts and organisations to identify and investigate the fraudster. You can also report insurance scams to the IFB CheatLine (powered by CrimeStoppers) on 0800 422 0421 or at https://insurancefraudbureau.org/cheatline.

Crash for Cash scams

There’s a lot more to Crash for Cash than its catchy title. It’s a scam where fraudsters deliberately engineer an accident so that they can make a claim against other drivers. This could be while parked or on the road (suddenly braking so they’re hit from behind).

Allianz’s research found that a high proportion of crash for cash scams (4 in 10) happen between the school run and rush hours of 3 and 7pm and 27% happen during the lunchtime hours of 11am and 2pm.

How can I spot a Crash for Cash driver?

There are many different indications that other drivers on the road might be planning a scam. First, be wary of how they are driving: are they braking unexpectedly or moving erratically? Try to keep your distance and stay safe if you have any doubts.

If you’re unlucky enough to have an ‘accident’, consider whether they have all the details to hand and if they seem pretty confident and relaxed after what, for most people, is a very stressful experience.

It’s important to take photos of the damage, take down their details and any other relevant information. Once you’re confident to do so, contact your insurer to let them know what’s happened and report suspicions to the IFB CheatLine on 0800 422 0421 or https://insurancefraudbureau.org/cheatline.

What is fronting in car insurance?

The simple explanation for car insurance fronting is when someone is added as the main policy holder when they are not the primary driver of the vehicle. A classic example is when a parent puts themselves down as the main driver even though their son or daughter drives the vehicle more than them.

People do this because older and more experienced drivers tend to have lower premiums than younger and new drivers. There may be entirely innocent reasons for people doing this and they might not even know they’re breaking the law.

If you are caught fronting, you could:

• Have your policy voided or cancelled
• Have any claims you make voided
• Face a criminal prosecution for car insurance fraud
• Risk getting a criminal record

Insurers can use many different techniques to see if people are guilty of fronting.

When you get a quote, you will be asked who the owner, registered keeper, main driver and named drivers of the vehicle are. You need to be honest and truthful when answering these questions.

• The owner is the person who paid for the car. If the car was a gift, the owner is the person it was given to. If leased or hired, the owner will be the finance company.
• The registered keeper is whoever gets the car tax, MOT and insurance cover. Their name is on the V5 logbook and will be the person who receives parking fines and speeding tickets.
• The main driver is the person who drives the car the most.
• A named driver is someone who drives the car on an occasional basis.

Complete your form honestly, listing each driver correctly. Even accidental dishonesty could void your policy.

What are other car insurance scams to watch out for?

You may come across fake ads online that promise very cheap insurance deals under the name of an established insurance broker. You need to be careful that the company you’re buying from is legitimate. Look out for the telltale signs of fraudulent activity listed above and make sure you can see the Financial Conduct Authority No.

The Association of British Insurers exists to provide peace of mind to insurance customers across the UK. Although not regulators, they engage with high-profile figures in the industry and help consumers understand the issues that it faces. This includes highlighting the dangers of scams including fronting, Crash for Cash and Ghost Broking.

Tempcover It!

If you’re in need of temporary car insurance after buying a new car or you’re borrowing a car after yours was damaged in a scam, you can trust Tempcover to get you where you need to go in the short term. Enjoy fully comprehensive coverage from 1 hour up to 28 days and get a quote in under 2 minutes.

Sources

https://www.theaa.com/car-insurance/advice/insurance-fraud

https://www.allianz.co.uk/insurance/magazine/car-magazine/how-to-steer-clear-of-crash-for-cash-scams.html

https://www.experian.com/blogs/ask-experian/how-to-avoid-car-insurance-scams/

https://www.autoexpress.co.uk/consumer-news/364256/car-insurance-scams-expert-advice-how-avoid-them

https://www.abi.org.uk/products-and-issues/topics-and-issues/fraud/

https://www.insurancefraudbureau.org/stop-the-scams

https://insurancefraudbureau.org/insurance-fraud/ghost-brokers