Friday, 30 January 2015

Why you are committing insurance fraud to make your kid's insurance cheaper...

It's a fact that car insurance for young drivers is expensive but what some parents don't realise is that in their attempt to reduce the premium they may be committing insurance fraud. 

Known as "Fronting" it is a process where an older more experienced driver will insure their child's vehicle under their own name and add their child as a named driver. This reduces the premium but is a fraudulent activity because the policy holder should be the main user of the vehicle. In the event of a claim if the insurer believes you are fronting they can refuse to pay out. Research by Go Compare suggests that nearly 25% of young drivers are fronting. 

Further research suggests that a considerable number of young drivers are lying about certain information when applying for a policy such as annual mileage, their job title, where the vehicle is kept overnight and even previous claims and points on their licence. Giving false information will invalidate your insurance cover and having a policy cancelled by your insurer will inflate your premiums in the future. 

"So can my child be a named driver on my policy?"

Yes, as long as they are not the main user of the vehicle. The disadvantage of being a named driver is that they do not accrue any no claims bonus. You can see a reduction as having the young driver as the main user and the name on the policy but adding an experienced driver as a second name to the policy. It's perfect you want to occasionally borrow the car and bring the premium down at the same time. 

"So how can I reduce the premium for a young driver?"

There are a number of ways of reducing the premium for a young driver each with their own pros and cons. There is no definitive answer which is best, it's a case of picking what is right for you.  We will look at a few options:

Voluntary Excess

Every policy has a compulsory excess. This is the amount that in the event of a claim, made either by yourself or someone you have crashed into, that you have to pay. The voluntary excess is an extra amount that you agree with your insurer when taking out the policy that you will pay in the event of an accident. The "voluntary" part refers to your decision to agree the amount at the start of the policy. Once agreed and the cover is in place in the event of a claim you will have to pay the compulsory and voluntary excess. Raising the amount of the voluntary excess is an easy way to reduce a premium but you need to make sure the combined amount of excess is affordable to you and you will be able to pay it in the event of a claim. 


Commonly referred to as a black box it records data about the use of the vehicle including location, speed, time of day, distance and how aggressively the vehicle is accelerating, braking and cornering. The main stream insurers seem to be coming away from the use of data recorders but there are still specialist telematics insurers. Most of these policies aren't cheaper initially as the driver must prove themselves with good driving before reductions are made. 
There has also been questions raised about who owns the data and who has the right to access it. It has been suggested that the police can request the data and it can be used to prove a driver's innocence or guilt in the event of an incident. 

Crash Cameras

Crash witness cameras are gaining popularity and work by continuously recording on a loop. Most have a system where when they detect violent movement the recording is "locked" so it cannot be over written. Some models of camera also have a motion detector mode when the vehicle is parked which can record incidents of vandalism or the increasingly common car park hit and run. They can also be used to identify "crash for cash" schemes where people deliberately cause accidents to look like they are not to blame. They can also be used in conjunction with telematics to give a very accurate picture of how a driver is behaving. Currently not all insurers offer discounts but some have been quoted as giving as much as 10% discount which for a young driver could mean the camera pays for itself in the first year. 

Pass Plus

Extra driving qualifications can reduce the premium for a new driver with no NCB. You can see the difference having the qualification makes when using price comparison websites. The discount might make a saving after paying for the price of the course.


Young drivers can also see discounts by being included on a multicar policy. Ideal if you are looking to insure all the vehicles in your household. 
Other General Factors

We did a blog about how the insurance premiums are calculated here: