One in six are fudging the truth to help their kids to obtain coverage
According to the results of new research thousands of parents are committing auto insurance fraud by pretending that they are the primary driver of a vehicle that is actually being used mainly by their student daughter or son.
Up to one in every six young drivers are saving money on their coverage through dishonesty.
The study was conducted by a website called Gocompare.com. It found that up to 16 percent of younger drivers are reducing the cost of their auto insurance by pretending that they are not the primary driver of their car. That said, this places the policyholder at considerable risk if the young driver should be involved in an accident at the residence of a college or university or another similar location.
This immediately raises red flags by the auto insurance company that “fronting” may be going on.
This could make an insurance claim a notably lengthier process, as an insurer that suspects that “fronting” is occurring will launch an investigation into the claim. Fronting occurs when a driver that has a lower risk associated with him or her – in this case, a parent – claims to be the primary driver for a vehicle that he or she will rarely (if ever) drive compared to the higher risk individual.
This practice is frequently undertaken by parents who mean well and are only trying to help their cash strapped student sons and daughters to be able to save money on their vehicle coverage – which is typically associated with higher premiums within that age group. Unfortunately, this is a form of fraud and it can come with serious legal and financial consequences. Insurers who discover that this was occurring are entitle to refuse to pay for a claim. They may also settle a third party claim so that their costs can be recovered from the policyholder parent.
Moreover, if the auto insurance does make a payout on a claim, then the young driver could be deemed “uninsured” and be fined for failing to obtain coverage. They could then face an automatic driving ban and may even be prosecuted.