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Car insurance sees older children sharing parents' policies

29 October 2009 / by Rachael Stiles

The average age of 'children' who have been added to their parent's car insurance policy has risen from 25 to 31 in the last 12 months, uSwitch.com has found.

As the ongoing recession continues to stretch consumers' finances, an increasing number are turning to mum or dad to drive down the cost of their car insurance, with 2.5 million policies now having a child added.

This might sound innocent enough, but it has led to an increase in the number of drivers committing insurance fraud through 'fronting' – whereby the parent is named as the main driver, even if it is the child's car, because more experienced drivers are usually rewarded with lower premiums.

Consequently, reported cases of fronting are up 30 per cent compared to two years ago, and, along with other insurance fraud, which costs the industry an estimated £1.9million a year, it adds an average £44 to each UK households' insurance costs.

High premiums on car insurance for young drivers, coupled with the other rising costs of driving such as soaring fuel prices, have made it increasingly expensive for young motorists to keep their car on the road, leading many to commit fraud through fronting to save cash.

Some young drivers who cannot afford the premiums are taking the drastic measure of foregoing car insurance altogether, with as many as 20 per cent of 17-20 years olds driving uninsured, figures from the Motor Insurers' Bureau show.

A further 20 per cent of young drivers who have only third party car insurance have chosen this lower level of cover because they cannot afford comprehensive car insurance. 

Commenting on the figures, Mark Monteiro, insurance expert at uSwitch.com, said: "Not only are hard-up ‘kidults' living at home for longer, but they are hanging around on their parents' insurance policies for longer too. It is no secret that younger drivers pay far higher premiums than older motorists because of the higher risk involved."

The penalty for being caught fronting could be severe, Mr Monteiro warns, such as having a claim refused, or settling a third party claim but then recovering the costs from the parent as the policyholder. The young driver could be deemed uninsured, incurring a heavy fine and six penalty points, which would result in an automatic ban for new drivers as well as increasing their insurance costs in the future, he added.

"Insurance fraud simply adds to the overall cost of insurance - in other words consumers end up picking up the tab. And ultimately, committing insurance fraud is not worth the risk. If affordability is an issue, there are steps you can take: look at increasing your excess, downgrade your cover, trade your car in for one in a cheaper insurance class," but above all, Mr Monteiro recommends that drivers compare car insurance quotes to find the best deal.

© Fair Investment Company Ltd

 

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