Insurance fronting describes the process by which somebody purchases insurance in their own name on behalf of someone else who will be a named driver on the policy. By any standard, insurance fronting is illegal.
An example of insurance fronting would be for a parent to purchase car insurance documents in their name but are to be used by their children. For instance, if Mr Smith was to take out a policy for his son’s car with Mr Smith being the main driver, but his son was the named driver this would represent insurance fronting.
Insurance fronting is relatively common in the UK as parents strive to reduce the cost of motoring for their children, who may be subject to high premiums if they are young or novice drivers.
Co-operative Insurance released information suggesting parents have fronted insurance at one time or another in 41% of cases for their children. This substantial statistic indicates that parents are either not aware of the law or deem insurance premiums are too expensive.
Accident claims which involve insurance fronting are invalidated due to the fact that the insurance itself is invalid. Naturally, the relatively minor cost of insurance in the event of an accident, is nothing compared to the problems and expense that could result.
Criminal prosecutions could be brought against parents as well as their children facing driving bans if they are found to have been insurance fronting as this is fraud. Repair bills are another consideration, as is the fact that personal injury claims against insurers cannot be pursued.
The Co-operative also found that 61 per cent of people would consider insurance fronting again after trying it in the past and 33 per cent of parents know at least two other people who have committed the crime. On the point of legality, 57 per cent of offenders were aware that insurance fronting was illegal at the time of taking out or accepting the policy.
“The view that motor insurance fronting is harmless and doesn’t hurt anyone could not be further from the truth. Parents who believe they are helping their children to save money by fronting are not only risking prosecution, but harming their chances of obtaining insurance in the future”, was quoted by Tim Franklin, Chief Operating Officer of Co-operative Financial Services.
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