Fronting and how to legally lower insurance premiums
20 October 2015 | Bruce Compton
This is a guide to insurance fronting, young people’s insurance and how to avoid soaring insurance premiums and keep them down. The guide covers the following points:
The word ‘Fronting’ is used to describe when an older, more experienced driver insures a vehicle in their name when the actual main driver and/or owner is a younger less experienced and higher risk driver. It is often used by well-meaning parents trying to save their children money because of the rocketing cost of car insurance.
This false economy is actually committing fraud and could invalidate an insurance policy. In addition, the driver could face prosecution for fraud or driving without insurance if the policy is cancelled. This can lead to a criminal record, affecting their future job prospects, finance and chances of getting insurance.
35% of drivers justify ’fronting’ as being a loophole in the law according to research carried out for MIB’s Stay Insured campaign. 1 in 10 believe it to be a legitimate and lawful way of getting a better deal on their insurance.
Research from The Motor Insurers Bureau (MIB) and Aviva reveals that 70% of UK drivers do not understand what ‘fronting’ means, but that one in five of those that do understand the term admit to it.
The Financial Ombudsman Service claims it currently handles between 100 and 200 fronting disputes each year.
Fronting usually occurs because of the high cost of insurance premiums for young drivers. The average cost for comprehensive cover rose by 40% in the 12 months to March, according to the AA.
If you regularly use the car, on a daily basis to drive to or from work or a place of education and/or the vehicle is maintained by you, then you should be the registered main driver.
Fronting is illegal
Fronting could invalidate your insurance and lead to prosecution and a criminal record.
It is ok to be added to your parents or an older more experienced drivers policy if you are only an occasional driver (i.e. your parents are the main drivers, but you have their permission to drive the car sometimes) and/or the main policyholder is the registered keeper and owner of the vehicle and responsible for its upkeep. This is called ‘piggybacking’.
You do not build up no claims bonus discounts while you’re just a named driver on someone else’s policy and you can only be an occasional driver. If you drive the car more than occasionally then this would be ‘fronting’.
Insurance for provisional drivers works in exactly the same way to any other motoring policy. The cost of insurance for a young driver on a provisional license can be very high but is often parallel to a younger inexperienced driver having just passed their driving test.
Provisional drivers are often put on parents or more experienced driver’s policy while they are learning to drive, however, in the long run, it could be more cost-effective to start with a policy of their own so that no claims bonus can start to accumulate.
There are an abundance of comparison websites today specifically designed to compare quotes from different insurers. If you are willing to look, they can often get you a much more competitive deal.
Increasing the voluntary excess on your policy ( the amount you would need to pay in a claim) or stripping unnecessary optional extras such as courtesy cars and breakdown insurance can lower premiums.
If you are a young or inexperienced driver, it pays to consider the car you are going to insure before buying it. Cars are divided into 50 insurance groups according to various factors including their engine size and the likely cost of repairs. The higher the insurance group, the higher the premium. Check with an insurer first.
It does take time, but for every claim-free year that passes, you build up a year’s no-claims bonus which gives you a discount on your following year’s premium. Five claim-free years can be worth up to a 70% discount and no claims can be protected on a comprehensive policy once you have built them up.
It may sound obvious, but making a claim or adding penalty points on your licence to your policy, will increase your premium next year.
Telematics insurance schemes involve fitting a “black box” to a car which, using satellite technology, records a young or inexperienced driver’s behaviour at the wheel. It records the time of day, mileage, acceleration, braking and cornering. It can save as much as £800 a year on premiums. The better you drive, the lower the premiums.
A younger, inexperienced driver could add a motorist from a lower-risk category to their policy, such as a parent or an older, experienced driver. Providing that all declarations made are accurate, this is not illegal and in some cases, could lower the premiums.
Always make sure that the information you give your insurer is 100% accurate. In the event of an accident or a need to claim, nobody will benefit from a policy which is invalid or inaccurate. False information will inevitably only lead to poor or no cover, and potentially get you into trouble with the law.