Insurance Fraud
Driving a car has always been very expensive, but recently it’s been getting more and more expensive with no signs of giving up. Filling up at the pumps is now more than it has ever been and this is putting extra financial strain on our already bulging overdrafts.
Of course this financial pain has been around for a long time, but normally only young drivers felt this pain. The main cause of financial hardship for young drivers is car insurance; insurance is a huge cost that seems to go up every year. Statistics rather unfairly brand all teenagers as lunatics that are more likely to get into accidents than older drivers. As a result of this higher perceived risk insurance companies hike up their premiums.
Teenage drivers can quite easily pay thousands of dollars for their car insurance premiums every year and although this can be painful, it’s just something that you have to go through. The quickest way to reduce the costs of premiums is to build you your own no claims bonus.
Named Driver
Another option would be to be added onto your parent’s insurance policy as a named driver, this will mean that they can benefit from savings on their premiums and can be one of the cheapest ways to get insured for your car. However this does meant that you won’t start earning your own no claims bonus.
A named driver should not be the main driver of the vehicle, however in most cases he is. Lots of parents try to help their children out by insuring the car in their name and then adding them onto the policy as a named driver, as they are the main driver this can technically be seen as fraud. Insurers call this fronting and isn’t something that the insurance companies appreciate.
Most students and parents don’t even realize that they are doing anything wrong; they think that it’s a legitimate way to reduce the insurance premiums. They are taking the car away from home to university and becoming the main driver even though the insurance policy is actually in the parents’ names.
The problem for insurers is that it’s very difficult to identify when a car is insured using fronting, however if the car is involved in a claim then the insurance company could find out what is going on.
Even if you don’t tell the insurer what is going on then they may be able to work out, if you have an accident away from home in a university town then this could be a sign that you’re possibly fronting the insurance policy.
Fronting may be a way to save money at the moment, but because you are not able to generate your own no claims bonus when using this method it is actually a false economy. It’s best to pay now and then relax as your insurance premiums come down. Insurance is a legal requirement and it’s not something you can do without, so you’ll have to put up with the cost.
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