The number of motorists that have had car insurance claims declined due to giving dishonest information about their circumstances has escalated with fraud becoming a significant problem for many insurers.
The main practice used by people to defraud an insurance company is known as ’Fronting’ and will see an older more experienced motorist claim to be the person that uses the vehicle the most, when in fact it is driven by a younger, novice driver on the majority of occasions.
This is an attempt to get discounted insurance premiums, but can have a harmful long-term affect on a young driver’s chances of securing an affordable policy in the future.
One car insurance industry expert said, “Young drivers should start earning their own no claims discount as soon as they can by insuring the vehicle in their own name, as it’s a valuable commodity when it comes to buying car insurance. The important thing to remember is that whilst it might be tempting to alter certain details or omit key information, this is treated as fraud by insurers and could result in your policy being invalidated.”
Insurance prices have risen because of these fraudulent claims and have seen an increase of around £30 to the cost of premiums. This is because of expenditure that has been incurred by insurance companies because of bogus applications.
Despite this increase in costs, many drivers will still consider giving wrong information when applying for a policy in the hope of being offered a better deal.
During a recent study, only 39 per cent of the 1,500 people asked said they would not consider giving false information if it leads to a cheaper policy.
The majority of fraud cases are exposed when a customer files a claim. However, this can see the claimant left with a large expenses bill that they will have to pay because of their bogus claim. If a third party is involved, the insurance premium might still need to be settled or legal action could be authorised in a bid to cover the third party damages.