Car insurance scams costs the industry millions and can push up premiums for drivers. Here are the top scams you should watch out for.
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Car insurance scams can leave you out of pocket
When we think of scams, we often imagine a fraudster calling someone pretending to be from their bank or someone clicking on a dodgy link and sharing personal details.
However, scammers also target drivers by making false claims in an attempt to profit from their policy.
Sadly, car insurance scams can be dangerous and can leave you hundreds, or even thousands of pounds, out of pocket.
We’ll round up the most common UK car insurance scams, so you can be aware of what to watch out for.
Ghost brokers: how the scam works
Fraudsters sometimes pose as insurance brokers and sell fake car insurance policies that cost far less than a typical policy would.
As young drivers usually face higher insurance prices, they are often targeted by scammers advertising these discounted 'policies' on social media, university notice boards and anywhere young drivers might spot them.
The RAC flags that some insurance policies may be genuinely purchased from insurance companies but then modified by changing the driver's age or occupation to reduce the price significantly – making it worthless to the driver should they need to make a claim.
In some cases, the ghost broker may cancel the policy after selling it to the driver and get a refund, leaving the victim with no cover.
You should buy your car insurance from a trusted, recognised brand, either through a comparison site like Compare the Market of Moneysupermarket, or direct from the likes of Direct Line, RAC or Churchill.
Avoid buying a policy via social media channels or WhatsApp.
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Ghost brokers: how to check an insurance broker is legit
If you’re approached by someone claiming to be an insurance broker, you should check with the British Insurance Brokers’ Association to ensure they are authorised.
If you can’t find the broker on this British Insurance Brokers’ Association’s list or find only a phone number and email address is provided, it’s possible that you’re dealing with a ghost broker.
Want to check that your car is properly insured? You can check this in the Motor Insurance Database (although it won’t have personal details of the policy itself).
It’s generally best to get in contact with the insurance company directly to verify the policy is genuine and has the correct details.
If you have been tricked by a ghost broker, make sure you apply for a valid car insurance straight away. It’s illegal to drive without insurance – and you could get fined, penalty points on your licence or your car could be seized and destroyed.
Your insurer might be able to help point you in the right direction for a legitimate policy, but they’ll have to cancel a policy if it involves incorrect or misleading information.
Make sure you contact Action Fraud and the Insurance Fraud Bureau (IFB), to report the scam.
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Crash for cash: how this scam works & red flags
A crash for cash scam involves a fraudster staging an accident by damaging the car themselves or inducing an accident so they can make money from an insurance claim, personal injury or car hire claim.
“Crash for cash can happen in many different ways – from a staged incident to an induced accident – and it can be really tricky to spot,” comments Matthew Crabtree, head of financial crime strategy at LV=.
"That’s why we encourage consumers to read up on the latest trends and crimes fraudsters are committing, to understand the signs and behaviours if ever caught up in insurance fraud.
"Taking photos at the scene and checking for CCTV in the area can also provide crucial evidence, to help ensure criminals are brought to justice and keep the cost of insurance down.”
One of the simplest ways to avoid a crash for cash scam is to keep your distance from other cars, making it more difficult for someone to slam on the brakes and induce a collision.
Always be alert to unusual behaviour from other drivers (including the driver two cars ahead who could be an accomplice) and keeping your distance from cars that are damaged.
The IFB warns drivers should focus on the vehicles, not just brake lights, as fraudsters sometimes disable theirs and to be extra cautious pulling out of a side road.
If you are involved in an accident and the driver and/or passengers appear unphased, appear to exaggerate injuries or have their written insurance information to hand, you could be dealing with a scammer.
Make sure you get as much information about the driver, passengers and what happened, including pictures, footage from a dashcam and note down any CCTV in the immediate area.
“Photographs and evidence are great [for insurers],” advises Crabtree.
You can anonymously report any information to the IFB’s cheatline on 0800 422 0421 or online here and contact Action Fraud.
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Flash for cash & slam on fraud: how these scams work
Flash for cash scams are similar to crash for cash scams, but a key difference is that the criminal first flashes their headlights to let a driver through before then crashing into them on purpose.
According to Crabtree, this kind of scam tends to happen at mini-roundabouts, so it’s worth being wary if you’re ever navigating one.
The RAC adds that it can be tricky to prove a crash was intentional in court as it’s your word against theirs unless you have a dashcam installed.
Slam of fraud is when a scammer uses their brakes spontaneously in the aim of getting involved in a crash, so they can try and get as much money as possible.
The RAC warns that some scammers will sometimes hide in a driver’s blind spot before overtaking them and slamming on the brakes.
As these scams can unfold without warning, it can be tough to figure out what’s going on.
It’s worth being wary of any suspicious behaviour from drivers, getting a dashcam to record any incidents and getting a blind spot mirror to improve visibility.
Why you should be wary after an accident
Unfortunately, you could also be targeted by scammers after the accident itself. Victims are sometimes called about claiming for an accident in a bid to get hold of personal details.
If you do suffer any whiplash injuries, you can now claim for these injuries directly with the insurer.
Crabtree warns against using claims management companies as they might to try and maximise any payouts by exaggerating any claims – before taking up to a 40% cut for sorting the claim.
If you sort out your whiplash claim directly, you won’t risk misleading insurers and get to keep all the compensation provided.
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