Fool News: Many Parents Unintentionally Commit Insurance Fraud

Parents and grandparents are unwittingly committing car insurance fraud.

Thousands of unwitting parents may be committing insurance fraud by letting their kids drive a car primarily insured for mum and dad.

Research by Zurich Insurance reveals that nearly a tenth (9%) of drivers who have helped their kids and grandkids to purchase a car currently have it insured in their own name, with the majority blissfully unaware that what they are doing could be breaking the law.

The practice, known as `fronting', involves one person insuring the car in his or her name and adding someone else as a `named driver', when this named driver is in fact the main or only driver of the vehicle.

More than half (57%) of the 1,036 people surveyed didn't realise that fronting amounts to insurance fraud, with nearly a fifth (19%) mistakenly presuming that the car should be insured in their name because they legally own it. Such assumptions can have serious consequences, leaving the driver uninsured with potential claims refused.

Over two thirds (68%) of drivers who had the car insured in their own name admitted they did it largely to reduce their premiums, and although many think that their insurer will never find out about fronting, if the driver is involved in an accident the repercussions can be more than just higher premiums. Insurers have the right to refuse claims and cancel policies where drivers have been dishonest.

In addition, declined claims can lead to the police treating the driver as uninsured, leading to fines amounting to hundreds of pounds and possible penalty points on their licence. For a new driver, six-points would lead to disqualification from driving.

To avoid potential confusion, it is a good idea to contact the insurer to confirm that the details of the main driver are accurate. This will avoid any future problems and ensures everyone is covered should misfortune strike.

More: Cheaper Car Insurance