Top Gear’s car insurance advice about fronting could cause big problems
30 June 2009 By Diane Ray 2 Comments
In the last episode of Top Gear (BBC1 Sunday evening), the team referenced ‘fronting’ as a way to keep young driver car insurance costs down but this is illegal.
Fronting on car insurance happens when parents insure their child’s car in their name as the main driver and then add the child as another driver, but the main driver is in fact the child.
This is done to keep the child’s car insurance costs down but it is illegal.
A better option is to take steps to keep the young driver car insurance costs down and to get the best cover for the best price.
There are many comparison websites available where you can compare car insurance, including such as Gocompare.com, Confused.com and moneysupermarket.com.
As Hayley Parsons, chief executive of Gocompare.com commented, ‘An insurance policy is a contract based on trust and you are obliged to tell the insurer of anything that could influence their decision in offering cover – the age and experience of a driver are both important facts. ‘
She added ‘As well as being illegal, fronting is a false economy. Insurers are wise to the practice and many now set the price according to the age of the youngest driver on the policy.’
To be fair, Richard Hammond, one of the Top Gear team, did say ‘if you do decide to put yourself on your parents insurance and you have a crash, and the insurance company find out that it wasn’t really your car….they won’t pay out, then they can prosecute you and you have to go to jail….’
This really is a case of ‘honesty is the best policy’.
To be honest, I don’t see the reason why car insurance companies charge young drivers so much. It just seems as they use the silly laws to back up their money draining schemes.
It is wrong to say that all young drivers have a much higher risk of having an accident. Some people learn to control a car much better then others. It depends entierly on the person. In my eyes older (over 50) are more likely to have an accident on the road or cause an emergency sitiuation due to the slower reflexes.
If insurance companies want to make still want to rip off money of people, they should use a more fair system of judging how likely the driver is to have an accident.
It is a stupid idea to charge people so much. Just think of families with less income who can’t help the younger driver with paying for the costs of running a car including insurance costs. This would mean the driver wouldn’t be able to get a car till much later in life and let’s say the driver is 25 when they first get a car.
So, from the insurance company’s point of view, the driver would be less likely to have an accident due to their age despite being a very unexperienced driver.
There is an irony here in that the CEO of a comparison site is the one that is complaining, when it is the comparison sites that have largely created the situation in the first place.
For years insurance companies relied upon inertia and they would have clients for longer so they could balance the premiums over a period of time. This way they could turn a blind eye to the occasional fronting situation, on the basis that the young drivers will grow up soon and become a proper paying customer. I am not suggesting that was the right thing but there was a balance.
Along come the comparison sites and rip the bottom out of the market, destroy the loyalty, as they are all fighting to bring the customer the best deal. This has forced many insurance companies to retreat to the lowest risk areas, leaving the young drivers high and dry as the few insurance companies left in this sector now only have a single year premium to balance their books, before the customers are off searching the comparison sites chasing the next deal.
To maintain their margins the insurance companies are hiking the prices for young drivers and investigating any claims for the opportunity not to payout, particularly as personal injury claims are increasing the level of payouts.
One of the easiest ways to create a fronted policy is through a comparison site, as they are so keen to sell a policy on price, the validity of the information is secondary.
The guys at Top Gear did a fabulous job of highlighting an issue and they repeated several times the problems that young drivers face if they do try and front insurance through their parents. The comparison sites need to put their own house in order before commenting from the sidelines merely to promote their own business.
If your kids get in a friend’s car should they check the insurance of the driver? If the insurance is in a parent’s name the chances are the insurance is not valid, so who pays out in the event of a life changing injury? If the driver is liable, that driver should be backed up by the insurance company. If the policy is invalid, what are the chances of successfully suing the driver and getting compensation? That will be a long hard battle that could destroy many families and make lawyers richer