More than two-thirds of UK drivers do not understand what it means to ‘front' an insurance policy and of those that understand what fronting is, there are one in five who admit to misleading their insurer and committing this kind of motor insurance fraud, according to new research from the Motor Insurers' Bureau (MIB) and Aviva
Insurance ‘fronting' occurs when someone other than the main driver of a vehicle is incorrectly declared as the policyholder.
An example of this would be a parent insuring a car and declaring themselves as the main driver in order to reduce the insurance premium, when in fact their son or daughter will be the main user of the vehicle.
By doing this, motorists are committing fraud and under contract terms, could invalidate an insurance policy. When parents are fronting up a young driver's policy it means the young driver is not fully declared and will not be able to accrue any no claims bonus of their own.
The research, which forms part of MIB's Stay Insured campaign and is aimed at drivers who may be vulnerable to driving without adequate insurance during the recession, also indicates that there is a disconnect between drivers' perceptions of fronting as a "white lie" versus the reality of it as a legal offence:
• More than a third (35 per cent) of drivers justify 'fronting' as being a loophole in the law
• One in ten (10 per cent) believe that ‘fronting' is a legitimate way of obtaining cheaper motor insurance
• And only a third (30 per cent) of motorists were able to correctly define the term 'fronting‘
• When presented with a definition of the term fronting 94 per cent of those surveyed deem fronting an insurance policy to be socially unacceptable.
The research also highlights confusion over responsibility for damages in the event of an accident. Under a valid insurance policy, the insurer will cover the policyholder's liability for injury and property damage for any other parties involved and if the cover is comprehensive, the damage to the policyholder's own vehicle.
However, a third (31 per cent) of drivers wrongly assume that they will be covered if the policy is 'fronted‘. In fact, where it is proven that a policy has been ‘fronted', insurance companies can refuse to pay out damages to the "insured" vehicle and may look to recover third party claim costs from the policyholder or driver.
"There is a significant degree of confusion amongst drivers about the importance of giving accurate information about the main driver to an insurer,” said Ashton West, Chief Executive of MIB. “There is a need to help drivers understand and appreciate the importance of being adequately insured."
"Insurance is about peace of mind and knowing that the cost of your liability on the road is covered. In the event that the driver of a fronted policy is involved in an accident, both the policyholder and the driver could be open to additional costs, penalties, fines and - potentially - prosecution. It simply isn't worth the risk.
Aviva's top tips for reducing premiums:
• Choose wisely - a smaller engine vehicle without modifications means lower premiums
• Think safety - parking in a garage at night and fitting alarms and immobilisers will help drive down costs
• No claims quickies - some insurers offer rapid bonus schemes that let young drivers earn a full year's no claims bonus in as little as six months
• Be online savvy - many insurers offer a discount if you buy directly with them online
• Keep it brief - if you use the car infrequently, agreeing to a mileage limit can help keep premiums down
• Pass Plus - Pass Plus www.passplus.org.uk is a training course for new drivers designed by the Driving Standards Agency in consultation with the industry. There's no final exam to pass but drivers could get up to 10 per cent off their insurance if they take the course.
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