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Dirt cheap car cover? You could be a victim of ‘ghost broking’

Written by: Paloma Kubiak
If you've been offered a suspiciously cheap car insurance deal and had to pay cash upfront, it’s likely you’ve fallen victim to ‘ghost broking’.

‘Ghost broking’ usually targets car owners who have been refused credit elsewhere or who may struggle to be accepted for pay monthly premium cover.

As people search online for cover they can afford on a monthly credit basis, they may stumble across sites offering a cheap deal as long as they can stump up cash in advance.

However, the ‘insurer’ or ‘broker’ uses stolen or cloned credit cards and ID to buy the cover on behalf of the car owner. The driver is noted on the policy as a named driver, they’re given the motor insurance certificate and they’re legally covered, but once the credit card is reported as stolen, the insurance company will cancel the policy.

As a result, the driver is unaware they’re uninsured, which means they’ll face problems in the event of an accident or claim. Most often, they’re stopped by police as the vehicle is flagged as uninsured.

Smartdriverclub Insurance, a telematics insurance provider, has seen a 14% increase in ‘ghost broking’ in the first-quarter of 2018.

It suggests the rise is being fueled by recent regulations which have made getting credit tougher, pushing more people online in the search for an affordable deal.

Given the rise in ‘ghost broking’, Smartdriverclub Insurance warns drivers to be on guard for car insurance offers at cheap prices, in return for cash.

Penny Searles, CEO of Smartdriverclub, said: “As premium levels have soared, ‘ghost broking’ has become a real challenge and a real risk for unsuspecting motorists.  The insurance cover will be cancelled once it’s identified as fraudulent leaving the motorist out of pocket and without insurance.

“The worst case scenario is that an accident occurs leaving the motorist high and dry because the cover will be found to be invalid.

“It is relatively easy for someone to set up a policy using a stolen identity and using the purchaser of the policy as the named driver.  As soon as we identify that the policy has been ghost brokered, we cancel the cover but by this point the fraudster has the motor insurance certificate and can pass this on to the innocent motorist.”

Searles added that the issue needs a concerted approach by the insurance sector to stop this racket “so that we can protect innocent motorists from the risk of invalid motor insurance”.

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