One of the most serious issues facing the insurance sector is fronting. The word simply refers to a sort of fraud that many policyholders are unaware they are doing. It may, however, have catastrophic ramifications.
Insuring high-risk drivers, such as a new driver who has recently passed their test, might be more expensive than insuring a seasoned driver. When a more experienced driver takes out an insurance policy in their name and names the riskier motorist as a named driver, the less experienced driver is the one who will be driving the vehicle the most. While this may lower the cost of the insurance, it may also render it void in the event of a claim.
A parent attempting to acquire auto insurance for their child who is starting university is a classic example of fronting. When the car is used to commute to and from a university campus, the senior driver will claim that they are the primary user.
Many people who ‘front’ don’t realize it’s unlawful and mistakenly believe they’re saving money on their insurance. However, if the young driver is the car’s owner or keeper, the coverage should be in their name. They should be named as the primary driver at the very least.
How do insurance companies catch fronting?
When a claim is filed, fronting will very certainly be identified. An insurance carrier may initiate an investigation if the identified motorist is involved in a collision, for example.
If the insurance determines that there has been fronting, it may refuse to pay for any damages. If a third party is involved, the insurance company is obligated to pay for the repairs, although it may seek reimbursement from the insured. The policyholder could be charged with fraud if the courts become involved.
In the most basic of situations, the business may simply cancel the policy or refuse to renew it until the correct amount is paid. However, in any case, the young driver may be accused of driving without insurance, which is prohibited and can result in points on their license as well as fines. Both of these factors will drive up the cost of future premiums.
A policyholder must also indicate whether they have ever had a previous policy terminated or been denied coverage when submitting a new insurance application. If this occurred as a result of fronting, it is possible that costs will rise as a result.
Additional than fronting, there are other techniques to save money on insurance premiums:
Can you get caught fronting insurance?
Simply put, fronting voids your insurance policy, which means that if you’re found doing it, your insurer may refuse to pay a claim.
“The repercussions of fronting can be serious and potentially life-changing for both the kids and the policyholder,” says Martin Smith, Aviva’s Motor Technical Claims Manager. “Every year, the insurance industry deals with hundreds of fronting cases.”
“Not only is it likely that the insurance will be invalidated, putting you at risk of criminal prosecution for driving without insurance, a fine, and the loss of your license,” Martin continues, “but in the event of an accident, if the insurer has to meet any third-party claim for injury or damage, they will have a right of recovery against the driver and the policyholder who signed the contract.”
That implies the motorist might face civil recovery actions, and a judgment against them would have an impact on their ability to engage into contracts and borrow money.
“In the same way, action can be initiated against the policyholder,” Martin adds. “The parent’s assets, including their home, may be worth more than the child’s. If the insurance pursues them in court, all of this could be jeopardized. Keep in mind that we might be talking about tens of thousands, hundreds of thousands, or even millions of pounds that have been paid out.”
Insurance fraud is also a criminal offense, therefore you could face legal consequences. Consult your insurer if you’re unsure who the primary driver of a vehicle is.
There are other valid ways to lower your insurance cost, such as telematics-based insurance or Aviva Multi-Car cover, which allows parents to be the primary policyholder while other family members can be primary drivers.
What is classed as fronting?
What exactly is fronting? Simply put, fronting in auto insurance occurs when someone usually a parent or elder driver falsely claims to be the primary driver of a vehicle when, in fact, the primary driver will be a younger or less experienced driver.
What is the penalty for fronting car insurance?
The repercussions are severe: policies that are canceled or cancelled, large fines, up to six points on your driver’s license, and the possibility of a driving prohibition.
The individual who spends the most time in the car should be the primary driver. This does not have to be the same as the registered keeper or the owner.
Car insurance fronting occurs when a young driver names an older person, such as a parent, as the primary driver on a vehicle when this is not the case.
Does it matter who is the main driver?
The main driver (also known as the vehicle policyholder) is the person who drives the vehicle the most and receives the no-claims discount. They don’t have to be the primary policyholder, but they do have to live in the same house as them.
Is it illegal to be a named driver on your own car?
Some people falsely declare that a more experienced driver is the primary driver of the vehicle they own in order to lower premiums, and then add themselves as a named driver. However, this method, known as ‘fronting,’ is a sort of fraud that is prohibited.
If you’re caught fronting, you’ll get six points on your license and a £7,000 fine. Some insurers will refuse to cover you if you have a history of fronting, while others will levy premiums that are just unreasonable or not worth paying.
Is fronting car insurance illegal?
Car insurance fronting is a sort of car insurance fraud that is unlawful. If you’re convicted of fronting, you might face a fine of up to £7,000 as well as six points on your license. Fronting can lead to higher auto insurance costs in the future, and some insurance companies may refuse to cover you altogether.
Is fronting finance illegal?
Fronting, in the context of car finance, is a fraudulent act in which one individual takes out a Credit Agreement on behalf of another.
This is a criminal offense that can result in prosecution and hefty fines.
Examples of fronting
When an individual is unable to obtain financing on their own, fronting may be used.
Alternatively, they could try to take advantage of a friend’s or family member’s good credit to get better interest rates.
However, many people are unaware that this is considered fraud and is against the law. We’ve included a couple of fronting instances below to assist you stay on the right side of the law.
Julie has poor credit and is having difficulty obtaining financing. Laura, a friend with a good credit score, agrees to apply for a loan on Julie’s behalf.
Laura is the policyholder, and her name appears on all of the financial records as well as the V5 logbook. Julie, on the other hand, keeps the automobile and sends Laura money every month to cover the Monthly Payments.
This is not only unethical, but it also jeopardizes Laura’s credit score. Laura is liable for repaying the debt if Julie is unable to make her monthly installments.
The lender may try to repossess the vehicle if neither partner can keep up with the payments. If Julie keeps the automobile, the lender may have difficulty locating it and may request police assistance.
John wishes to assist his son Tom in purchasing his first automobile. John obtains car financing and then modifies his name on the V5 document. Although John is responsible for the loan, Tom is the owner and driver of the vehicle.
This is one of the most common types of fronting, and it occurs frequently when parents want to buy a car for their child, or when couples make more than the other and can afford a more expensive loan deal.
How to avoid fronting
You can always file a Joint Application or act as a Guarantor to assist a friend or family member with car financing.
Both approaches are legal because the lender knows who you are at the start of the contract and, more crucially, they have your contact information in case they need to contact you.
Is a named driver fully comp?
Any other named drivers on the policy will be protected with the same level of insurance as the main driver once you’ve purchased your policy with your named driver(s) indicated. As a result, if the primary driver purchased a fully comprehensive policy, the named drivers will be insured as well.
Does the named driver need to live at the same address as the main driver?
No, even if you live at a different address than the principal driver, you can get auto insurance as a named driver.
Does a named driver need their own insurance?
You’ll need insurance for any vehicle you drive, whether you’re a named driver or not. So, if you’re a named driver on your parents’ automobile but also have your own car in which you’re the primary driver, you’ll need to get a separate insurance policy for your own vehicle before driving.
Can a named driver drive another car?
Yes, as long as you have a separate insurance policy covering that vehicle. Named driver insurance only covers you when you use a car sometimes; it does not cover you when you use other vehicles.
You’ll need temporary auto insurance if you need to drive someone else’s car for a weekend, a week, or even up to 28 days.
Can I drive another car without being a named driver?
If your policy includes DOC (drive other cars) coverage, you can drive another car even if you are not a named driver on the main driver’s policy – but only in an emergency, not on a regular basis like named driver coverage allows.
If you’re not sure whether your existing coverage covers you to drive other automobiles, don’t risk it until you get confirmation from your provider. If you don’t check, you risk driving without insurance, which can result in a fine of up to £300 and up to 6 penalty points on your license, as well as higher future premiums.
If you don’t have DOC coverage, buy a short-term policy or ask the owner of the vehicle you want to drive to put you as a named driver on their car insurance policy.
Does being a named driver affect my own insurance?
No, being included as a named driver on someone else’s insurance policy has no bearing on your own auto insurance if you get into a car accident.
You would need to file a claim on the main driver’s insurance policy if you were in an automobile accident while driving another person’s car as a named driver. As a result, the main driver’s no claims bonus (NCB) would be affected, and they’d have to pay higher rates in the future until it was rebuilt, but yours would be good.
Similarly, if the primary driver is involved in an accident and needs to file a claim on their policy, it will have no bearing on your insurance or your NCB (no claims bonus) (NCD).
While being a named driver has no bearing on your own insurance, it does prohibit you from accruing an NCD. However, if the named driver has their own vehicle and is thus designated as the main driver, they can accrue their own NCD.
Some insurers will allow you to build an NCD as a named driver if you buy your own policy later and transfer it over.
If you ever decide to switch insurance providers, perhaps to save money on your next policy or because you’re unhappy with the service provided by your current insurer, you can keep your NCD and transfer it to your new policy, but you’ll need to contact your previous insurer to obtain proof of your no claims bonus.
Does adding a named driver reduce insurance?
If you only use the vehicle sometimes, named driver insurance is substantially less expensive than an annual policy for the additional driver. In general, adding someone else to a car insurance policy costs between £15 and £30, however the price varies greatly depending on the circumstances of the named driver who is being added.
If an older, more experienced driver adds their child to their policy, they might expect to pay extra because younger drivers are statistically more likely to be involved in an accident and file a claim.
On the other, if a young driver adds an older, more experienced driver, such as a parent, to their insurance, the cost of coverage will be reduced.
Because they will not be driving it as much as the main driver, named driver insurance is often less expensive. This is because there is a smaller possibility of them being involved in an accident and filing a claim on their policy.
There are additional options for lowering the cost of insurance besides adding a named driver to your policy.
Why do people do fronting?
When their teenage children receive their first car, parents will always want to assist them.
However, a widespread practice might land both the parent and the youngster in legal trouble.
It’s known as fronting, and it entails lying to insurance companies about who drives the automobile the most.
Even if their sons and daughters have sole use, parents will sometimes list themselves as the primary driver.
According to research, more than half of young drivers are eager to take advantage of the illegal practice in order to save money on vehicle insurance.
This occurs when a low-risk or safe driver decides to assist in lowering the cost of another motorist’s insurance.
A motorist will classify themselves as the primary driver of a vehicle and name a younger driver as a named driver on the policy.
Parents who possess a car but want to buy their son or daughter their first car after they pass their driving test employ this method.
Why do people front?
Younger drivers and other high-risk drivers, as we all know, pay far more for auto insurance than older or lower-risk drivers.
As a result of this disparity, some people try to cut their insurance prices by setting up policies in the name of an older or lower-risk driver.
Can it get you in trouble?
Actually, it’s a lot more than that. It’s deception, and it can get you in trouble.
It’s a sort of insurance fraud, according to ActionFraud, and individuals found doing it might face punishment and perhaps a criminal record.
Why is it so rife?
“Insurance premiums for new, inexperienced drivers can appear excessive, and individuals are frequently startled at how much they cost when compared to the worth of the automobile they’re insuring,” according to Gocompare.
“However, the cost of rebuilding the car is insignificant in comparison to the possible costs of other parts of claims involving young drivers, such as personal injury claims for passengers and injuries, as well as damage to third parties’ vehicles.
“Unfortunately, drivers aged 17 to 20 are twice as likely as other drivers to file an insurance claim, and their claim expenses are three times greater.
“Although it’s reasonable that a parent would want to assist their child with the costs associated with getting on the road, insurance fraud is not the ideal solution.
“When consumers file a claim, insurers scrutinize them closely, and there’s a good likelihood that any ‘fronting’ will be discovered if parents need to use the policy.
“If the policy is discovered, the child may be held accountable for the entire cost of the accident, while the parent may find themselves in court and unable to obtain insurance in the future.”
- Are you breaking the law, drivers? There are seven things you do in your car that are actually unlawful.
What if I take the risk and get caught?
Despite the fact that your insurer is legally required to pay for any third parties involved, it may refuse to pay for your charges, including automobile damage and injury costs.
Not to mention the fact that fronting is a sort of insurance fraud that is prohibited, which means you or the primary driver of the vehicle could end yourself in court.
A felony conviction may have an impact on your insurance applications as well as any future credit applications you may submit.
How can I get cheaper insurance?
“If you realize that you can’t afford to pay a hefty insurance premium all at once, look into 0% credit cards.
“These will enable you to budget monthly premium payments while still benefiting from the annual payment reduction. Just make sure you pay your monthly bills on time, and keep in mind that the 0% terms aren’t permanent.”
Another option is to agree to have a spy in the cab who will keep track on your safety.
Telematics or ‘black box’ auto insurance is changing the way drivers, especially those under the age of 25, are insured.
New drivers can establish themselves to be safe cases and potentially save a lot of money by allowing their driving to be watched by their insurance carrier.