When it comes to car insurance, honesty is the best policy. Car insurance fraud can invalidate your cover, earn you a hefty fine, or result in criminal prosecution.
Car insurance fraud might happen unintentionally if you forget to update your details. Other types of fraud can be more malicious, and cause deliberate harm to other road users.
We're here to help you recognise the different types of car insurance scams, and learn how they can be avoided.
What is car insurance fraud?
Car insurance fraud is an attempt to cheat your insurer for financial gain. Being dishonest with your insurer might include faking accidents or lying about your address.
Withholding information, even unintentionally, could invalidate your cover.
Types of car insurance fraud
There are several ways to commit car insurance fraud:
Application fraud
You might try to get a cheaper premium by putting false information on your application. If your insurer discovers you've been dishonest, they could cancel your policy and reject any future claim.
Accidental fraud
Life changes fast. Sometimes you might forget to update important details, like a change of address. It might even be as simple as changing where you park your car overnight. Forgetting to tell your insurer about a change of details could invalidate your policy.
Pre-inception loss
Some fraudsters will try to take out an insurance policy after an accident has taken place. They may try to buy insurance straight away after an accident so they can make a claim.
Fronting
Fronting is lying about who the main driver of a car is. Young and inexperienced drivers pay more for car insurance. So more experienced drivers might claim to be the main driver to get cheaper premiums.
Vehicle dumping
This is when fraudsters dispose of a car so they can claim it's been stolen. They might go to the extremes of setting it alight, or sinking it into a lake. Other times, they may simply hide the car in a garage or sell it.
Whiplash fraud
This is a common type of insurance fraud where people claim to have a whiplash injury after an accident. They might pretend or exaggerate a neck injury to get a payout from their insurer. Recent reforms have made it harder to lie though, and you'll need valid medical evidence for whiplash claims.
Fake claims
Similar to whiplash fraud, this might mean exaggerating an injury, or the damage done to your car. If you lie about your injuries, or material damage for a larger payout, you'll be committing insurance fraud.
Staged accidents
Staging an accident is another form of insurance fraud. Two people might crash into each other on purpose, or arrange to crash into into an innocent driver. This is often known as a 'crash-for-cash' scam.
Imaginary passegners
Fraudsters might claim injuries for passengers who weren't in the car at the time of an accident. Lying about a person being in an accident to get a second payout could have serious consequences.
What car insurance scams should I be aware of?
Scammers might try to involve innocent drivers in their fraudulent activity. Here are some of the most common scams to be aware of:
Crash-for-cash
This is one of the most well known insurance scams. Fraudsters may intentionally cause a crash to make an insurance claim.
Flash-for-cash
In this type of scam, a fraudster flashes their lights at another driver to indicate they can go. (against the normal give-way rules). They'll then intentionally crash into them and claim for the damages.
Ghost borking
Scammers might pretend to be insurance brokers to entice younger drivers with cheap deals. Fraudsters will sell doctored or fake policies, taking the driver's money. Driver's are left uninsured and out of pocket.
Slam-on fraud
This is when fraudsters purposefully slam on their brakes so the person behind crashes into them. They'll then try to make a claim for the damages.
Compensation scams
Most of us have experienced a cold caller pretending to be someone they're not. Scammers might say that you're owed compensation after an accident you've been involved in. They might claim to be connected to the Motor Insurance Bureau (MIB). Even if you think you're able to recognise a scam, it's a good idea to stay alert. Scammers are becoming better than ever at impersonating other companies with the use of AI technologies.
Ad-spoofing
This is similar to compensation scams, where fraudsters pretend to be a person's insurer after they've had an accident. They'll then try to trick the person involved in the accident into using dodgy websites. Many people are unaware of this type of scam, so it's always worth staying vigilant.
What’s the normal punishment for car insurance fraud?
The punishment for committing car insurance fraud can be very serious. At the very least, your insurer could void your car insurance. You might even face fines, penalty points on your licence, and criminal prosecution.
If your policy gets voided, any claim you make will be rejected, and you're likely to struggle getting insurance in the future. The Motor Insurance Database (MIB) keeps track of your insurance history, and can flag to other insurers if you've had a claim voided or rejected.
Car insurance fraud may also have a knock-on effect on motorists in general. Fraud racks up costs for insurers who then raise insurance premiums.
How can I report car insurance fraud?
If you've been involved in a car accident that you believe was caused intentionally, you should contact the police. Evidence is your best weapon against fraudsters, so take any photos and videos that may help you.
It's also worth speaking to any witnesses so you can note down any details you may have missed. Any type of evidence could be useful in the investigation, and help you make a case against the fraudsters.
You'll also need to contact your insurer to tell them about the accident. If you believe it was caused deliberately, you should explain why you believe this to be the case.
If you believe you've been sold a fake policy through a ghost broker scams, you can contact the Insurance Fraud Bureau (IFB). You can visit their website or call their Cheatline on 0800 422 0421.
Tips to help avoid car insurance fraud
Car insurance fraud can have serious, long lasting impact whether it was intentional or not. For honest drivers, fraud doesn't just cause financial damage. It can also cause emotional and physical damage, depending on what scam has taken place.
So how do you avoid car insurance fraud happening in the first place?
How to avoid committing fraud yourself
Honesty is the best way to avoid committing car insurance fraud. But when life gets busy, it can be easy to forget to update your insurer on important changes.
Here's what you'll need to tell your insurer about:
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The main driver: Be honest with your insurer about who the main driver of the car is. You'll also need to let them know about any other named drivers on the policy.
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Car modifications: You'll need to tell your insurer about any car modifications. This might be car remapping, or changes to the exterior of the vehicle.
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The annual mileage: Your insurer will want to know your estimated annual mileage when you buy or renew your policy. If your mileage is higher than expected, you should tell your insurer as soon as possible so they can adjust your premium.
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Address: You'll need to tell your insurer if you change your address.
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Any accidents or claims: You'll need to be honest with your insurer about any accidents you've been involved in, or any claims.
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Where you park your car: Where you park your car can affect the price of your car insurance. So it's important that you tell your insurer the truth, and update them if this changes.
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Any driving convictions: You must tell your insurer about any motoring convictions, including penalty points. You'll need to tell them the type of conviction, The date of the conviction, and whether you received a driving ban.
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If you use your car for work or business: If you're planning to use your car for business-related activity, you may need business car insurance. You can check out our car insurance classes of use guide if you're unsure.
How to avoid being the victim of fraud
Falling victim to car insurance fraud can be an extremely upsetting experience. Staying vigilant can go a long way, and if something seems too good to be true, it usually is.
Here's how you can help defend yourself against fraudsters:
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Get a dashcam: A dashcam is a great way of providing evidence if you're involved in an accident. Dashcams can help with insurance claims by prove who was at fault.
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Be wary when buying insurance: Always stick to reputable insurance providers when looking to buy a policy. You can check if they're listed on the Financial Services Register to give yourself peace of mind.
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Take care on the roads: Always keep a safe distance when driving, and look out for tailgaters. Be aware of any cars with broken brake lights that may try to stop suddenly in front of you.
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Take photos: Taking photos and videos of the scene after you've been in an accident can provide useful evidence. You should take photos of any damage to the cars involved.
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Get details of the accident: Make sure you note down how many passengers were in the other car after an accident. You'll also want to take the other driver's details, and write down their number plate and insurer.
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Be wary of cold calls: Don't fall for cold callers claiming you're owed compensation after an accident. If you're ever in doubt, speak to your insurer directly.
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