Parents 'commit insurance fraud'
Updated on 14 October 2007
Thousands of parents have unwittingly committed insurance fraud by insuring their child's car in their own name.
One in 10 parents and grandparents who have helped their child or grandchild buy a car currently have it insured in their name, with the child added to the policy as a named driver, according to Zurich Insurance.
Two-thirds of people who did this said it was to help reduce premiums, as experienced drivers with no claims bonuses pay less for cover, while 19% thought the car should be insured in their name because they legally owned it.
But Zurich said the practice was actually known as fronting, adding that it was insurance fraud to insure a car in one name and add another person as a named driver, when this person was actually the main or only driver.
Despite this, six out of 10 parents and grandparents said they did not realise what they were doing was wrong.
The group warned that the named driver could be left uninsured if the insurance company established they were actually the main driver of the vehicle.
It said sanctions for this ranged from policies being cancelled and claims refused, to drivers being taken to court and receiving a fine, penalty points to their licence or even being disqualified from driving.
Scott Clayton, claims, fraud and investigations manager at Zurich Insurance, said: "It's natural that parents and grandparents want to give their kids and grandchildren a helping hand when buying and insuring a car, but fronting won't help them in the long run.
"Although many don't realise that what they're doing is illegal, they also don't realise that it's a false economy with serious consequences, should the driver have an accident.
"An insurer would be within their rights to decline a claim or recover any third party costs from the child or parent and grandparents themselves."
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