Up to 36,000 parents are putting children down as 'spouse' in motor insurance 'fronting' scam

By Ray Massey for the Daily Mail
Updated: 04:05 EDT, 23 February 2010

Up to 36,000 cash-strapped parents are fiddling their car insurance by putting their sons or daughters down as a 'spouse' on their motor policy.

The illegal scam, which helps families lower their car insurance premiums in the economic downturn is becoming increasingly popular, damning new insurance industry figures reveal today.

Yet most consider it just a 'little white lie' rather than a serious offence, and carry on with the insurance scam known to companies as 'fronting'.

Many parents are unaware that their actions constitute insurance fraud. (Posed by models)

Cases of fronting have doubled in the past two years as the recession has bitten and cost-cutting drivers have sought drastic ways to reduce their premiums.

This is despite insurance fraud and uninsured drivers adding £30 to the policies of law abiding drivers.

The 36,000 parents are among more than 200,000 cash-strapped motorists committing the fraud, insurers believe.

The shocking findings are the result of insurance industry research , principally by  online insurer swiftcover.com, the Motor Insurance Bureau (MIB), and Aviva.

Insurance fronting occurs when  an older, more experienced and lower risk motorist  is insured as the ‘main driver’ of a vehicle.

But, in reality, the vehicle is mainly driven and often owned by a much younger driver, who is then added to the policy as a ‘named driver’, bringing down the cost of their insurance cover.

Passing the younger driver off as a ‘spouse’ or ‘partner’ can reduce insurance costs even further.

An insurance policy could be invalidated if the company discovers the parents are 'fronting'

The MIB said: 'By doing this, motorists are committing fraud and under contract terms, could invalidate an insurance policy. '

Online insurer swiftcover.com calculates that nationally at least 36,000 parents each year are purposely misleading their insurers by putting down their sons and daughters as a ‘spouse’. 

Robin Reames, Claims Director for swiftcover.com, warned: 'Parents who think they are helping by fronting for their children are both breaking the law and making car insurance more expensive for everyone else.'

But separate figures from Britain's Motor Insurers’ Bureau (MIB) suggest the overall fraud figure could be even higher.

It says more than two-thirds (70 per cent) of the UK's 33 million  drivers do not understand what it means to ‘front’ an insurance policy.

But of the 30 per cent who do understand, about one in five (20 per cent) admit to misleading their insurer and committing this type of motor insurance fraud - equivalent to around 200,000 drivers.

More than a third (35 per cent)  justify ’fronting’ as a loophole in the law. One in ten (10%) believe it  a legitimate way of obtaining cheaper motor insurance.

A third (31%) of drivers also wrongly assume that they will be covered if the policy is ’fronted‘.

But insurance companies can refuse to pay out damages and may look to recover third party claim costs from the policyholder or driver, who may also face a fine and penalty points for driving without insurance.

Ashton West, Chief Executive of MIB said: ' In the event that the driver of a fronted policy is involved in an accident, both the policyholder and the driver could be open to additional costs, penalties, fines and - potentially – prosecution.  It simply isn’t worth the risk. '

Nigel Bartram, motoring strategist at Aviva added: 'Well meaning parents may consider fronting an insurance policy to try and save money, but this is false economy.'

The total cost of uninsured motoring in the UK is about  £500million, adding some £30 a year on each policy for law-abiding motorists.