According to data from the Association of British Insurers, 180,675 applications were made for car insurance where some of the information was fraudulent. That amounts to almost 3,500 applications a week or a staggering 495 every day! These applications were exposed either when the motorist initially applied for the policy or after they obtained cover and went to make a claim.
Common tricks included concealing information about driving convictions, exaggerating the amount of No Claims Bonus’ you have or parents claiming to be the main driver of a vehicle which is largely used by their child. We’ve all seen the questions about where your car is stored during the day or what you predominately use your car for and it seems more people than you’d think are misleading companies by providing the wrong information.
Last month Zurich published a study which showed that 1 in 5 people (of the 2000 polled) admitted to having made deliberate or accidental errors on their insurance applications at some point in the past. Out of those 1 in 10 admitted to lying because they were scared of the consequences of being truthful.
Leading UK law firm, Accident Advice Helpline said that “While everyone wants to save money the most important thing is giving your insurer the correct information, because if you forget to mention a scrape you claimed for or that you use your car for commuting, your insurance company may not pay out in the result of an accident.”
Higher insurance premium
Not only could an insurer not pay out if you have an accident but you could get your insurance policy cancelled outright due to fraud which means the cost of a future policy will be higher. It also means you could risk incurring a IN10 conviction (driving without insurance) if you continue to drive. Confused.com’s Gemma Stanbury said this means in time it “will increase your premiums and limit the amount of providers available to you.”
Aidan Kerr, the Assistant Director at ABI said “While insurers know that innocent mistakes and oversights happen, they are also aware that some people think that being less than honest is the way to get cheaper cover, when the way to get the best deal is to play it straight with the insurer”.
The ABI has estimated that these sorts of frauds add around £50 to every honest person’s insurance bill. George Robbins, at fraud consultant BAE Systems Applied Intelligence said “This impacts the budgets of millions of honest motorists”. To try and combat this changes are coming afoot whereby you may have to enter your driving license details when you attempt to buy car insurance.
By doing this insurers can use the driving license number to contact the DVLA and find out information including how long you’ve had a license for, what type of license it is, whether you have any driving convictions and where you live. However this means if you’ve lost or misplaced your license you may have to wait to get a replacement before you can apply for your insurance.
The initiative was due to launch this summer but delays have occurred and although an exact date hasn’t been decided, it’s likely to be before the year is out. Accident Advice Helpline said “We welcome any practical changes that can improve the accuracy of information provided to insurers and naturally welcome any resulting reduction in insurance premiums”.