Car insurance fraud

What is car insurance fraud?

Car insurance fraud comes in many forms, but it mostly stems from being dishonest with your insurer or faking accidents or injuries to gain financially.

For example, someone might not be truthful about their driving history to get cheaper insurance premiums. Or an opportunist could make a false claim to try and get a payout.

But whatever the motivation, the consequences could be severe, both for the culprit and for other drivers who are impacted by the costly effects of car insurance fraud.

Types of car insurance fraud

There are several different ways to commit car insurance fraud, including:

Application fraud

It might be tempting to provide false information in your application to get cheaper car insurance premiums. But if insurers discover you’ve not been honest, your policy could be cancelled and any claim you make is likely to be rejected.

Accidental fraud

Sometimes you might forget to update important details, like a change of address or where your car is being parked overnight. If your details change, it’s important to tell your insurer, otherwise you could risk invalidating your policy.

Pre-inception loss

This is when someone tries to claim for damage to their car that happened before they took out their policy. Some fraudsters try to buy car insurance immediately after they’ve been involved in an accident so they can make a claim.

Vehicle dumping

This could be anything from hiding a car in a garage around the corner to setting it alight, sinking it into a lake or river, or even just selling it. Once disposed of, the owner pretends the car is stolen and tries to claim the money from their insurer.

Whiplash fraud

A common type of car insurance fraud is exaggerating or pretending to have a neck injury after an accident to get a payout from insurers. But recent reforms are making this more difficult for fraudsters and medical evidence is now needed for all whiplash claims.

Fronting

Young and inexperienced drivers pay more for car insurance. So if an older person is falsely named as the car’s main driver on the policy, this is known as fronting. It’s usually done to get lower premiums but it’s illegal and could result in a hefty fine or even a criminal record.

Fake claims

If you’re in an accident and decide to make up or over-exaggerate your injuries, or you lie about the damage to your car or belongings to get a larger payout, you’ll be committing insurance fraud.

Staged accidents

Sometimes fraudsters will get together and stage an accident, whereby the two drivers are both in on the scam. They may either purposely crash into each other or work together to intentionally cause a crash with an innocent driver.

Imaginary passengers

Some people try to claim injuries for imaginary or phantom passengers, who weren’t in the car at the time of the accident, in the hope of getting a second payout. But there could be serious consequences for anyone that pretends they were in an accident.

Types of car insurance scam

Sometimes scammers try to cheat car insurance providers by involving innocent drivers in their organised fraudulent activity.

Here we explain some of the most common scams:

• Crash-for-cash - This is when fraudsters intentionally cause a crash to make a fraudulent insurance claim.
• Flash-for-cash - A fraudster flashes their lights at another driver to indicate they’re letting them go (against normal give-way rules), then intentionally crashes into them and claims for damages.
• Slam-on fraud - Criminals unexpectedly slam on their brakes in the hope that the car behind will crash into them and they can make a claim.
• Ghost broking - Fraudsters pose as insurance brokers and offer cheap deals, typically to younger drivers. Selling fake or doctored car insurance policies, they take the driver’s money but leave them uninsured.
• Compensation scams - This is a type of cold calling where a scammer calls to say you’re owed compensation after an accident you were involved in. Sometimes they’ll claim to be connected to the Motor Insurance Bureau (MIB).

What are the consequences of car insurance fraud?

If you get caught committing insurance fraud, the consequences can be serious. You could face a fine, penalty points on your licence and even criminal prosecution.

And at the very least, your policy will be voided. Any claim you make will be rejected and you’re likely to find it harder to get insurance in the future.

Unfortunately, the consequences of car insurance fraud affect honest motorists too.

As well as being put at risk on the road if you’re the victim of a staged accident, insurance scams can also leave you out of pocket.

And car insurance fraud can have a wider knock-on effect on motorists in general.

In 2020, the cost of false car insurance claims racked up £602 million according to the Association of British Insurers (ABI) - insurers then pass these costs onto other drivers through higher premiums.

How to avoid committing car insurance fraud

To keep your car insurance legal and avoid committing insurance fraud, you need to be as accurate as possible with the information you provide.

You’ll need to tell your insurer about:

• The main driver (and any other named drivers)
• Any modifications to your car
• Your annual mileage
• Any changes to your address
• Where you park your car
• Any accidents or claims you’ve been involved in previously
• If you have any driving convictions or points on your licence
• If you use the car for work or business reasons

It’s also important to let your insurer know if any of your details change. Otherwise, it could be considered fraud and might mean any potential claim you make is rejected.

How to report car insurance fraud or scams

If you think you’ve been the victim of insurance fraud, there are a few things you need to do.

Firstly, if you’ve been involved in an accident that you believe was intentional, you should contact the police. Take photos and videos, speak to witnesses and note down any details that might be useful for an investigation.

You’ll also need to contact your insurer about the accident and explain why you believe it was caused deliberately.

And if you think you’ve been sold a fake policy by a ghost broker, you can contact the Insurance Fraud Bureau (IFB) by visiting their website or calling their Cheatline on 0800 422 0421.