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Cutting insurance corners backfires on motorists

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13/08/2015
Thousands of motorists are paying a high price and in some cases driving illegally, by cutting corners when buying motor insurance, according to new Association of British Insurers (ABI) figures.

The statistics indicate insurers uncovered 212,000 attempted dishonest applications for motor insurance in 2014 – just over 4,000 every week – an 18 per cent increase on 2013.

Common lies exposed include ‘forgetting’ to disclose previous claims or unspent convictions, giving a false address in a lower risk area, and ‘fronting’ – parents insuring a vehicle driven by their son or daughter in their name. Last year, over 1,500 reports to the Insurance Fraud Bureau’s ‘Cheatline’ related to motor insurance, almost a quarter of the total calls received.

The ABI also warns against ‘ghost broking’ scams, which involve illegitimate insurance advisers selling bogus motor policies, resulting in an innocent motorist driving illegally without valid insurance, facing prosecution and having their vehicle seized and crushed as a result. Ghost brokers often operate in pubs, clubs, car parks and university campuses, but can also use deceptively professional websites.

Recently, an illegal insurance adviser who made £65,000 selling phony policies was jailed for two years. Another con man, who sold worthless car insurance to Manchester students, was jailed for three years. Another illegal insurance adviser, already serving a jail sentence for fraudulent selling, was ordered by the Central Criminal Court to repay over £600,000 to 600 drivers or face an increased prison term.

The ABI urges drivers to use legal means to secure the best value motor insurance. They advise motorists to shop around, using comparison websites and insurance brokers to secure a competitive deal from a licensed and legitimate provider.

Drivers can check if their policy is on the Motor Insurers’ Bureau’s Motor Insurance Database by visiting www.askmid.com, which holds details of all vehicles insured in the UK, and check whether an insurer or broker is authorised by consulting the Financial Services Register.

“Anyone lying to get cheaper motor insurance, or tempted by cheap insurance offers without first checking that they are genuine, risks driving illegally,” said Mark Allen, fraud and financial crime manager at the ABI.

“The consequences include a criminal record and massive financial headache if found to be at fault for a crash. The risks are not worth it – especially when you can shop around for the right policy at the lowest price.

”Industry initiatives, such as the Insurance Fraud Register, MyLicence that allows insurers to check for any motoring offences, and the work of the Insurance Fraud Bureau and the Insurance Fraud Enforcement Department in tackling ghost brokers are helping to reduce the scope for insurance application fraud.”

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