Car insurance fraud explained

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In this guide

What is car insurance fraud?

When you think of car insurance fraud you might assume it just affects insurers. However you can either be the victim of fraud, or accidentally committing fraud when trying to save money on your car insurance.

What is ‘ghost broking’?

Ghost broking is when you accidentally buy fake car insurance off someone pretending to be an insurer, often offering very cheap deals online.

How does it work?

Ghost brokers, also known as ‘illegal intermediaries', will often target young people who cannot afford to pay the traditional rate that insurers will offer you. The victim will hand over money and receive documents that look like official insurance papers, despite the vehicle not being insured in any way. They can do this by either forging documents, or taking out a legitimate policy in your name but cancelling it straight away. Many victims will not know they are a victim until they are stopped by the police or they try to make a claim when they are involved in an accident.

How do I spot a ghost broker?

Ghost brokers operate in a number of different ways so it can be hard to spot them. Often it will occur online, either through social media or money saving forums. They have been known to even approach people in pubs and clubs. The general rule of thumb is that if it sounds too good to be true, it probably is. An authorised insurance broker will have to be listed on the British Insurance Brokers' Association website, therefore if they are not listed on there you should stay away.

Will I be penalised?

When it comes to ghost broking, legally you will still be treated as if you have intentionally been driving without insurance. This means that: 

• You might have to pay a fine and six points will be added to your driving licence.
• Your vehicle could be impounded by the police and you will have to pay a fine to release it.
• If you are involved in an accident you will not be able to make a claim and will therefore have to pay for the damage yourself.

What are crash scams?

Crash scams are when someone deliberately stages an accident so that they can claim money from your insurance providers. They can do this in a number of ways but the two most popular are called ‘crash for cash' and ‘flash cash'. They will often go beyond car damage in these insurance scams and claim various injuries such as whiplash.

Crash for cash

This is when someone in front of you deliberately slams on their brakes so that you crash into them, making the accident your fault so that you would have to pay.

Flash for cash

This happens when you are at a set of traffic lights and someone flashes to let you out and then crashes into you, where you will therefore technically be at fault.

What should I do if I think I'm being crash scammed?

The best thing to do at the site of the accident is to take down as many details as you can, never admit liability, and find witnesses. After this you should contact your insurer and police immediately and explain to them what you think has happened.

Other ways to commit car insurance fraud

There are a few other things to look out for if you hope to avoid being a victim of, or to avoid committing, car insurance fraud:

Fronting

The most common way people are caught committing car insurance fraud is through a process called ‘fronting'. This is when someone is added to a car insurance policy as the ‘secondary' or ‘named' driver and is actually the main driver. It's often done when a parent adds their child to their policy because it brings the child's cost down significantly, but it's illegal and can be penalised severely.

Circumstance change

When you take out an insurance policy a number of factors are taken into account. This can be anything from where you store your car to any modifications you have made. As soon as these change you should inform your insurance company immediately so your policy is not at risk of being voided.

Dumping

There are many cases of people abandoning their vehicle and setting fire to it so as to make fraudulent claims that it's been stolen. This again, is illegal and you can be severely penalised for trying to do so.