Surge in parents committing car insurance fraud to help children
Insurer LV= said the number of policies it had identified between March and May this year, where well-meaning parents are “fronting” their children’s car insurance, had almost tripled.
Older and more experienced drivers are typically charged far lower premiums than newly qualified drivers, with those under the age of 25 usually paying a big premium.
With the cost of living rising and bills on the up across the board, LV= said it suspected parents were looking for ways to save money.
The insurer carried out research that showed nine out of 10 parents had no idea that putting themselves as the main driver on a policy to cover a car driven primarily by their child is considered fraud.
The risk of being discovered and a policy being voided is much higher for newly passed drivers, as they are more likely to end up in an accident than experienced motorists.
A void policy where the parent is named the main driver would result in the parent themselves being liable to pay for damage and any legal fees.
When driven by a new driver the car itself is more likely to have more major damage than a bump or scratch, according to LV= claims data, and serious accidents can lead to expensive claims for personal injury compensation.
‘Fronting could result in a criminal record’
Matt Crabtree, head of fraud strategy at LV=, said: “If the car is involved in an accident, parents could also be liable for the damages and injuries caused in the accident and, in some cases, severe consequences can include a substantial fine, points on their licence and even a criminal record.”
He urged anyone who may have declared themselves as a main driver when they aren’t or provided details that aren’t true to update their policy before it’s identified.
“There are other ways that the cost of insurance can be kept down and we’d encourage new drivers and parents to understand what these options are,” he added.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “This is a common trap for parents to fall into without realising they’re actually breaking the law.
“Parents understandably want to help their offspring with sky-high insurance costs in the first years after they pass their test. However, ‘fronting’ is the worst possible solution.
“They would be far better helping them to shop around and consider things like a telematics box to bring costs down.”
Once a car has a box fitted, careful driving and sticking to any rules imposed by the insurer will keep premiums low.
Coles also suggested that parents could choose to group all their car insurance together under a single policy, which can bring down the cost of cover for teenagers.
“They can also specifically choose a car in a low insurance group, which will rule out high performance cars with expensive parts, but will mean cheaper insurance for affordable cars with good safety and security features,” she said.
Agreeing and then sticking to a lower annual mileage, paying premiums annually rather than monthly, and considering a higher excess will also bring down the cost of cover for drivers of all ages.
She added: “Whatever parents do, they should shop around because some insurers will see young drivers as a lower risk than others, so there will be a cheaper deal on offer out there somewhere.”
Alex Hasty, director at comparethemarket.com, said the average premium in May 2022 cost £1,245, but there are other ways to save.
Hasty said: “There are lots of other ways you could reduce your premium without breaking the law. Some ideas include a black box or telematics insurance policy, taking a Pass Plus Scheme qualification within a year of passing your test, buying a cheaper car to insure or avoiding car modifications. It is also a good idea to shop around and compare policies to see if you can find a better deal.”