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The insurance scam costing young drivers £912 each: how to protect yourself

Joanna Faith
Written By:
Joanna Faith

Students and young people are being targeted by fraudsters selling fake car insurance.

Figures from Action Fraud show 17-24 year olds are most likely to fall victim to ‘ghost brokers’ who often offer cheap and alluring prices for premiums.

From November 2014 – July 2018, the reported losses for these victims totalled £164, 993, with each person losing on average £912.

City of London Police say students typically don’t have much money at this stage of their lives, and coupled with the high insurance premiums they face, they are prime targets for ghost brokers.

Young people, especially students, are warned to be wary of heavily discounted prices on the internet or cheap prices they’re offered directly for car insurance, as they may well be ghost brokers.

Detective Superintendent Peter Ratcliffe of the City of London Police’s Economic Crime Directorate, said: “Falling victim to ghost broking can have a devastating effect on people’s lives, and this is especially the case for university students. It will impact them financially, at an important stage of their lives, and it could also affect their education and ability to travel.

“While offers of cheap car insurance may be tempting for students, purchasing car insurance through a ghost broker will end up costing you far more in the long run – both in terms of money and your licence.”

‘It’s a horrible feeling’

Paul Jones, 18, bought car insurance through someone he came across on Instagram who claimed to be an insurance broker. He received full policy documents but when he was involved in a minor collision and contacted the insurer they said his insurance had been cancelled as there were a number of discrepancies in the details provided when the policy was originally taken out.

He went through the policy and discovered various details were incorrect. The broker would have done this to bring the premium down. Paul tried to contact the broker, but the broker had blocked his number and was no longer on Instagram. In total, Paul lost £2,200.

He said: “It’s a horrible feeling and it’s really impacted on my ability to get future car insurance as companies are now offering me even higher prices than before.”

“I think a lack of experience and knowledge of the insurance industry was a big factor in why I was fooled. It’s important that people around my age be wary of offers of cheap prices for car insurance and always carry out the proper checks to ensure it’s legit.”

How to avoid becoming a victim of ghost broking:

  • Trust your instincts – if an offer looks too good to be true, then it probably is.
  • Ghost brokers often advertise on student websites or money-saving forums, university notice boards and marketplace websites. They may also try to sell insurance policies in pubs, clubs or bars, newsagents and car repair shops.
  • Be wary of ghost brokers using only mobile phone or email as a way of contact. Ghost brokers have even been reported using messaging apps, including WhatsApp, Snapchat and Facebook. Fraudsters don’t want to be traced after they’ve taken your money.
  • If you are not sure about the broker, check on the Financial Conduct Authority or the British Insurance Brokers’ Association website for a full list of all authorised insurance brokers: fca.org.ukand biba.org.uk.
  • You can also contact the insurance company directly to verify the broker’s details.
  • You can check to see if your car is legitimately insured on the Motor Insurance Database website: askmid.com.