Even though fronting on your car insurance
is a criminal offence, many parents are unaware of the risks they run by doing it. LV= car insurance underwriter Alexander Curley answers the key questions around fronting to help drivers and parents understand why it's such a bad idea.
1. What exactly is fronting?
Fronting is where the main driver is misrepresented to the insurer, usually with the policy set up in someone else's name. A common scenario is an older, more experienced driver fronting for a younger driver who is a higher insurance risk.
For example, a mother or father insuring their child's car in their own name, with themselves as the main driver instead of the child.
Fronting is usually carried out to try and reduce the cost of insuring the higher risk driver, but it has serious consequences.
2. Why is it illegal?
In insurance law, a policyholder is bound contractually to give full and accurate information to enable insurers to correctly underwrite and price the risk. By fronting, drivers are providing false information.
The Fraud Act 2006
defines fraud as the defendant being dishonest with the intention to make a gain or to cause loss to another, while The Consumer Insurance (Disclosure and Representations) Act 2012
defines the different types of misrepresentation and the subsequent remedies available to insurers when dealing with them.
3. What is meant by the vehicle's main driver?
The main driver is the person who spends the most time driving the vehicle.
Where a car is shared by multiple drivers it can be tricky to determine who the main driver is. If you're not sure, speak to one of your car insurance provider's customer representatives.
If the main driver of a car changes, you should notify your car insurer as soon as possible.
4. Why do younger drivers have to pay more for car insurance?
Younger drivers have less driving experience and are more likely to be involved in accidents.
'One in five young drivers will be involved in a crash within six months of passing their driving test,' according to the Association of British Insurers
'A survey of ABI members clearly showed that young drivers (aged 17-24) were far more likely to have made a catastrophic claim (a claim for more than £500,000) than drivers in other age groups. These claims are not 'bumps and shunts' but major crashes that will have serious consequences for the driver, their passengers and other road users,' reveals an ABI report
'Drivers aged 17-24 were far more likely to make a claim that included three to five bodily injury claims, showing that their crashes usually involve more passengers,' continued the report.
As a result, a young driver's car insurance premium will be higher, as these accidents can lead to expensive claims for personal injury compensation.
Insurance costs have also been impacted by the Ogden rate changes
. The legislation means insurers have to pay out bigger lump sums for personal injury claims, which in turn means an increase in annual premiums
Over time, a young driver will become a lower insurance risk. The longer they've held their licence, building up claim-free years and their No Claim Discount (NCD) with a policy in their own name, the lower their premiums will become.
5. What happens if you get caught fronting?
The insurance policy could be invalidated and declared void or cancelled. This means that the policyholder, and those named on the insurance policy, will be left without insurance. Misrepresentation can be identified when taking out a policy, when a claim is being processed, or even after a police stop.
If you are caught fronting, the following could happen:
- A claim not being covered by the insurer
- Premiums that have been paid by the customer not being refunded
- The insurer seeking to recover any third-party claims costs and liabilities
- Other policies held by the customer being cancelled by the insurer
- The offender being prosecuted for fraud, which can lead to a criminal record
- The offender’s details being uploaded to shared fraud databases used by other insurers and financial service companies
- The offender struggling to find insurance cover or obtain credit elsewhere
6. What are the benefits of signing up as a main driver when it is accurate?
First and foremost, by being honest in correctly disclosing the main driver on the insurance, you won't fall foul of the consequences related to fronting.
The main benefit for a younger driver of having a policy in their own name is building up their own NCD, which will help reduce the cost of their insurance in future years.
7. What other ways could you be committing fraud on your car insurance policy?
Any form of misrepresentation when buying insurance has the potential to be classed as fraud.
The answers given to the questions asked in the insurance application must be honest and accurate, as they are used to assess the risk and to calculate the premium.
Providing inaccurate information for a claim, like exaggerating the value of a loss or extent of injuries, can also result in serious consequences.
If you are applying for a car insurance policy for a younger driver, or for someone who may be expected to pay a higher premium, make sure that all the information on your application is accurate – especially when it comes to the main driver. Not committing fraud is essential if you want to avoid any hardship down the road.