Car insurance fronting by parents can 'wreck futures'

18 June 2009 / by Rachael Stiles
Parents who try to reduce the cost of their child's car insurance premium by insuring their son or daughter's car in their name – 'fronting' – are risking their future, and that of their children.

Young driver car insurance specialist, Young Marmalade, is warning parents not to participate in this illegal activity known as fronting, where the car is registered in the parent's name and the child is added as a named driver, because it could have dire consequences.

A huge number of parents are "risking their futures by trying to save on their son’s or daughter’s car insurance," according to Young Marmalade spokesman Nigel Lacy, because the car insurance provider has assessed the risks based on false information.

Research conducted by Young Marmalade, has discovered that as many as 45 per cent of parents admit to fronting on their child's car insurance, and then cross their fingers that their son or daughter will not have an accident which requires a claim to the insurance company.

But, if they are unlucky, and the insurance company refuses to pay out because they suspect that fronting has occurred, then parents could find it very difficult to prove otherwise.

Thousands of claims are being rejected by car insurance providers that suspect fronting has occurred, Young Marmalade's research has found, saving the insurer millions of pounds, but not the parent or child.

Mr Lacy relays an occasion where an insurance company that suspected a customer of fronting went next door to their neighbours to enquire who drove the car most. "With a loud exhaust, music blaring and tinted windows – revenge is sweet," he said.

This case resulted in the insurance company rejecting the claim for comprehensive cover of the customer's vehicle, but paid out the third party liability – it is now taking the parents to court to recover these costs.

The case could end up in the criminal courts, Mr Lacy warns, because it is classed as insurance fraud, and, in order to recover the third party expenses, the insurance company can seek a charging order on the parent’s house or an attachment of earnings order, potentially wrecking their future.

Meanwhile, if the child is found to be driving without the appropriate insurance, they could have their licence revoked and be forced to take a re-test.

Another consequence of fronting is that getting car insurance for both the parent and child in the future could be tricky and expensive, because the rejected claim will remain on the motor insurance database.

"With insurance policies in some urban areas commanding market premiums well in excess of £4,000 for a young male, is it any wonder that parents will take a big risk to save money and hope their sons or daughters will not crash," Mr Lacy added, "but is this now a risk too far?"

Young Marmalade offers a combined car purchase and insurance scheme designed to lower the costs of car insurance for young drivers.

Apply online for Young Marmalade car insurance or compare other car insurance for young drivers

© Fair Investment Company Ltd