Most people think of insurance fraud as unscrupulous drivers making false claims, but there’s a different type of insurance scam, where drivers themselves are the victims, having been sold fake or invalid insurance policies.
Car insurance premiums have been increasing over the last few years and, although there was a dip in 2020 due to Covid-19, which resulted in the reduction of traffic on our roads, the Insurance Times reported on 11 January 2021 that car insurance premiums are on the rise again.
This leads many motorists to shop around for a better insurance deal, with many looking for discounts on their current premiums. This has paved the way for criminals to capitalise on motorists in hard times, by targeting drivers, particularly those with very high premiums. This is often young drivers, or those that have had an accident or have points on their licence, as these will attract higher premiums.
You can often save money on your insurance premiums by discussing your needs with an insurance broker who is registered with the FCA.
There are a number of things you can do to reduce your premium, without risking having invalid insurance.
Many of us are now working from home, which for many can significantly reduce the mileage you do each year in the vehicle. Many insurers will provide a discount for a reduced mileage as you are less likely to have an accident on the road.
Many owners add extra security to a vehicle. These can often provide a discount from your insurer, if they are a recognised security option. Don’t forget to mention this to your insurer when obtaining a quotation. This could also include where you keep your vehicle, such as in a garage rather than on the street.
There are a wide range of affinity groups and brokers now offering specialist insurance for your vehicle; these could be for:
As a specialist provider they may have additional discounts and offers available for your vehicle.
Chris North FCII is a respected industry leader with over 40 years' experience, who has worked in the insurance industry in a variety of roles, accumulating a wealth of knowledge. He is currently Technical Manager for Towergate's motor division, providing expertise on all matters relating to motor fleet insurance, in particular haulage and self-drive hire fleets.
Ghost brokers target drivers looking to get a good deal, often found on social media platforms or through a friend of a friend at university or college.
The scam operates in a couple of ways:
Both will leave the customer with no valid insurance which puts themselves, their family and their property at risk of not being covered, should they be unfortunate enough to need to make a claim. Many customers do not find out their insurance is invalid until it is too late and they have handed over potentially many hundreds of pounds to obtain, what they thought was, a good deal on their insurance.
You can also be prosecuted for having no insurance and receive a fine and a minimum of six points on your licence.
Using common sense when vetting brokers is important. Look out for discrepancies in their website, which often include:
Be wary of links on social media: it is always best to check these out before purchasing from them. You can do this by checking brokers to see if they’re registered with the British Insurance Brokers’ Association (BIBA).
They also need to be authorised and regulated by the Financial Conduct Authority (FCA) to practice lawfully.
If you suspect you may have fallen victim to a fraud, you can call the Action Fraud helpline on 0300 123 2040.
Read more on our motor insurance webpage.
Date: March 14, 2021