Motoring costs are enough to make most of us wince, but make sure you don’t fall foul of the law trying to drive your bills down. Research by LexisNexis Risk Solutions confirms the vast majority of us would never contemplate trying to mislead our insurance company in an attempt to lower premiums, but there are a few who are prepared to provide information that isn’t entirely truthful.
The company found one in four people think it’s acceptable to omit or adjust information when applying for car insurance.
While this may result in cheaper premiums, honest policyholders will inevitably end up subsidising them. According to the Association of British Insurers (ABI) insurance fraud adds an extra £50 a year to every honest insurance customer’s premiums. The Insurance Fraud Bureau estimates the cost of fraudulent organised motor insurance claims alone is £392m each year, and that 1 in 7 personal injury claims is connected to a suspected ‘crash for cash’ scam.
Of course, the vast majority of us wouldn’t dream of committing fraud, and it’s likely that many consumers do not even realise that adjusting and omitting information when applying for insurance can constitute this sort of felony. This can often be the case with ‘fronting.’ Fronting occurs when you falsely declare another person, perhaps an older, more experienced driver, as the main driver of the vehicle in order to reduce premiums. It can invalidate your insurance and can to a fine and penalty points on your licence, so it should be avoided at all costs. However, you can add a more experienced named driver to your policy to help reduce premiums.
Fronting and ‘named’ drivers
According to LexisNexis, when it comes to deciding who is named as the main driver, 29% of people admit to ‘fronting’ their policy by naming someone other than the person who will drive the car the most. Factors influencing who they would put as the main driver include who has the main income (25%), a better driving record (12%) or who has historically had a lower cost policy (11%). A further one in 10 people think it is acceptable to use someone else’s address when applying for motor insurance, and that 15% think it is okay to try to change their number of ‘no claims discount’ years to achieve a better discount.
However, most motorists are only too well aware of the repercussions of providing false information to an insurance company, and know that if they are caught, they could end up with a fine, or even a criminal record. Insurers are certainly doing everything possible to combat fraud. For example, the Insurance Fraud Register (IFR), launched in September 2012, brings together all data on known fraudsters held across the industry. The aim of the register is that it helps insurers to weed out insurance fraudsters who have committed fraud against other insurers in the past.
Impact of technology
Telematics insurance also helps reduce fraud. This type of insurance monitors your driving habits through the use of a ‘black box’ fitted onto your car, so the safer you can prove you are on the roads, the lower your premiums are likely to be. Will telematics change my driving style - V1 It can also provide information about the events leading to a traffic accident, to help establish which driver was at fault. Two-thirds of people questioned said they are comfortable with this type of product.
Bill McCarthy, managing director at LexisNexis, said: “While a quarter of people think it is acceptable to omit or adjust information when applying for car insurance, the majority recognise that this is unacceptable behaviour. “One way insurers can address consumers who are willing to mislead is to verify that the information consumers are giving them is correct through smart use of data verification and analytics. Through better use of data analytics, insurers can underwrite risk more accurately – creating benefits for both insurers and consumers.” Insurance fraud is one problem, but uninsured drivers are also a big problem - find out why some people risk prosecution by driving without adequate cover, here.