Parents committing fraud with their children’s car insurance

Many parents are unwittingly committing fraud by putting their own names on their children’s motor insurance premiums – risking leaving the policies null and void.

The practice, known as “fronting”, involves a parent putting an insurance policy in his or her name, and then listing the child as a named driver. This makes the policy much cheaper, because young drivers often have to pay significant four-figure sums for their insurance.

However, if the child is the main driver of the vehicle, it constitutes fraud – and an insurer is within its rights to cancel the policy and refuse to pay out if a claim is made. Parents risk getting a criminal record if they are caught fronting, and the young drivers will find it even harder to get a policy in future.

A study of the issue by price-comparison site Gocompare has found that more than 15% of parents with children aged between 16 and 25 admit to fronting. More than a third of those asked said they would consider doing so in future.

Matt Oliver, of Gocompare, said: “Car insurance for young drivers can be expensive and it’s only natural that parents want to help their children get on the road.

“But lying to their car insurer is absolutely the wrong way to go about it and could have serious consequences for both the parent and child.
“Parents shouldn’t be tempted to hide a young motorist as a named driver on a policy. When applying for car insurance, you are obliged to tell the insurer of anything that could influence their decision in offering cover – the age and experience of a driver are both crucial factors.
“Not telling the truth about who is the principal driver is technically fraud, which may result in a policy being cancelled and any claims refused.”

If a claim is made under a policy where the parent is fronting, the insurer has the right not only to cancel the policy but also to recover any third- party claims from the parent.

Furthermore, anyone “covered” by the policy would be effectively uninsured and could be fined hundreds of pounds and receive six penalty points.

Mr Oliver added: “In the long run, it is better for young drivers to hold insurance in their own name to build-up a valuable no-claims discount.”