fronting for insurance...?

[joko]

i know its illegal - so forget that bit for the moment

id like to know in general terms, whats wrong with it?

the car and people are still fully insured and in the event of an accident, they will pay out...so other than the insurance company losing a few quid - who does it harm?

just curious here, and genuinely want to know - not looking for a row

thanks

[jackthehat]

But 'that's' why it's illegal; the insurance companies will have lobbied for this loop-hole to be closed.

[joko]

yes i am aware of that...but i mean everyone else...

[jackthehat]

The Insurance companies are in business to make money, not pay it out..........if they find themselves in the position of having to pay out they either tighten up the regulations, OR hike up the premiums for everyone else.

[joko]

again jack i am aware it is illegal...that is not my question

what harm does it do to you or me?

if you have an accident with someone who has been fronting, what differnce does it make to the outcome? (assuming the insurance company never find out)

does it change anything?

[jackthehat]

Assuming the insurance company never find out, I agree, it ought to make no difference. It's a pretty big assumption to make, though, and if investigations were made there'd be no payout..............

[joko]

yes i agree...but how could they ever prove it?

so basically what someone pays for their insurance,, whether its 300 or 1,000 makes no odds to the outcome as long as they are insured...

[jackthehat]

The insurance companies would receive far more revenue if everyone had an individual policy which is why they don't want anyone 'doubling-up'.

I think the likelihood of getting caught is directly proportionate to the figures involved. The insurers will want a variety of reports, etc. and statements and therefore the chances of getting caught would increase.........

[hc4361]

"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. "

http://www.fairinvest...futures%27--3436.html

Insurance companies aren't stupid but give quotes on premiums believing the information given is truthful.

Why do people think this sort of fraud, and claim hiking after burglary etc, is acceptable?

[ChuckFickens]

Same reason as people think that downloading music is OK too HC. They think it's a victimless crime.

[New Judge]

The harm it will do to you or me is that our insurance premiums will have to increase.

Insurers base their premiums on a risk. Fronting means a greater risk is taken by the insurers than is reflected in the premium. The result is they lose money on any claims made by those who have made false declarations and so the premiums increase for the rest of us.

Simples!

[Coobeastie]

Who does it harm...well the insurance company for a start & anybody paying their premiums as the company will be certain to have added an element to the charge to cover the cost to them of such activities.

[joko]

so the only harm is increasing premiums?

but the insurance company are still being paid the premuims - the same as if the person was not fronting...

the only real difference is the frequency in which the named driver uses the car...but since there is no limit to that, what difference does it make?

they would still find reasons to hike up premiums...if no one fronted i dont believe would affect our premiums at all...

[New Judge]

No, that’s not the only harm, joko (although it’s harm enough because it means those who avoid making the proper payment are subsidised by those that do).

A bigger harm is drivers having the policies revoked and hence are driving without insurance. Insurers can and do cancel policies retrospectively when they discover fronting and this most usually occurs after a serious accident has taken place.

[factor-fiction]

Simple- take thecase of a mum/da fronting for a teenage son. The significantly higher risks are not reflected in the premium. The insurer pays out for an accident. The cost of any accident far outweighs the premiums.
Result- premiums go up for everyone

[New Judge]

And, joko, you need to swot up on how insurance premiums are calculated, how the risks are assessed and how, if the risk assessment is invalid it can increase the inurers' costs - which they pass on to their other policyholders.

[TCL-MUMPING]

Insurance companies assess risk, if a male and female driver have exactly the same circumstances, the law allows the female to be given a lower premium because she is a lower risk. An 18-year old driver is more than three times as likely to have an accident as a 48-year old driver.

It would be a lot easier for insurance companies to work out a premium for each model of car and charge everyone the same regardless of age or experience, the premiums would go down for some but up for an awful lot more.

Would you be happy in those circumstances?

[Wak]

Please excuse my ignorance in these matters but from all of the above comments can I assume that "Fronting" means a parent lets a child of theirs over 17 drive their vehicle and be covered by the parents insurance policy without informing the Insurance Company???

[factor-fiction]

Wak- an example of fronting is when Son has a car but because of high premiums he gets his mum to insure it in her name with the son added as a named driver.

[Wak]

Many thanks for the info, Factor30. I've learnt something today so it hasn't been wasted.
I suppose it's just another way that devious, crafty people get round their problems??

[LCDMAN]

Wak, it's essentially lying about who the main user of the vehicle is, in an attempt to reduce the premium. Who is most likely to be behind the wheel at any particular time changes the risk assessed and thus the premium charged. If Mum says she is the main driver, yet uses it less than 10% of the time (or not at all) then the risk has been assessed on the wrong person. The risk will be greater than that assessed and the premium should therefore be higher. The chance of having to pay out when "Johnny" wraps his "mums" chavved up shitbox round a tree, has also risen.