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Daily Insurance Industry News
Tuesday 25th of July 2017
November 1, 2007

Illegal ‘Fronting’ In Car Insurance A Growing Problem

by Stewart Douglas

Story link: Illegal ‘Fronting’ In Car Insurance A Growing Problem

A survey released today by gocompare.com has uncovered that some 60% of parents do, or would consider, fronting on their child’s car insurance in order to benefit from a reduction in insurance costs, jeopardising both their own cover and their child’s access to future insurance policies.

The shocking statistic revealed that parents with children of driving age across the country are far more open to the illegal practice of insurance fronting than was previously thought, with potentially criminal consequences for both parties involved.

The process involves experienced adult drivers insuring their children’s cars in their own name before naming their child as a secondary driver, which in many cases can yield a significant saving on normal insurance prices.

However this process is a fraud on insurance companies, which the survey revealed was far more prevalent than had at first been expected.

The consequences for drivers caught fronting a policy can run into fines and even triggering invalidation clauses in their own insurance policies, which can in turn leave them to foot the bill in the event of some genuine insurance claim.

Additionally any record of fronting will lead to significantly increased insurance premiums in future, which could see many young drivers running in to problems later on in life as they seek cover in their own names.

Speaking today on the findings, Hayley Parsons from gocompare.com was quick to point out that fronting a policy is treated the same in law as being uninsured, and a declined claim on the insurance can lead to new drivers being stripped of their license.

It is thought that the insurance industry will introduce more stringent measures against fronting insurance policies in light of the results of the survey released today.

 

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