Parents behaving badly
Lying to your car insurer to save money on premiums apparently is common enough in the U.K. that the practice has its own nickname.
"Fronting" is when a lower risk driver, typically an older one, insures a vehicle in his name, but the actual main driver falls into a higher risk category, such as a young or inexperienced driver, according to the London-based website YourMoney.com.
The quick translation is that parents seriously consider breaking the law and committing fraud to save money when insuring their kids.
YourMoney.com reports the following findings from a study:
- Twelve percent of parents would insure their child's car on a policy in the parent's name in an attempt to reduce the premium their child would have to pay.
- One in ten, or 13 percent, of parents confessed to having lied on their own insurance applications.
- Twenty-four percent would consider lying to their insurer if it meant saving money on their premiums.
- One in five parents, or 20 percent, said they considered car insurance to be "a complete rip-off and would gladly tell a white lie if it reduced their premium."
Meanwhile, a recent survey by the Insurance Research Council found that folks here at home have similar feelings about insurance fraud. Twenty-four percent of Americans believe it is acceptable to increase an insurance claim by a small amount to make up for deductibles they are required to pay, according to the study, "Insurance Fraud: A Public View, 2013 Edition."
Additionally, 18 percent believe it is acceptable to increase a claim to make up for premiums paid in previous years when they had no claims. The study also found that 86 percent of Americans agree with the statement "insurance fraud leads to higher rates for everyone," while 10 percent agree that "insurance fraud doesn’t hurt anyone."
Regardless of whether you live in the U.S. or the U.K, parents face stiff hikes in their rates when adding a young driver to their policy. Here in the U.S. drivers under the age of 24 typically pay much higher rates than most mature drivers with clean driving records. For parents adding a teen to their policy, their rates typically at least double, but in some cases increase by much more. (See: "What a teenager does to your car insurance rates.")
Being dishonest with your insurer, however, is not the answer. If you lie to your insurer, any claims you make could be rejected and you could be forced to pay restitution or face jail time if you're busted. (See: "Truth or consequences: Lying to your insurer can be costly.")
Despite this, the study showed that 9 in 10, or 87 percent, of parents in the U.K. study acknowledged that they knew they could have their insurance claim rejected as a result of lying to their insurer. It seems they think they won't get caught or feel the infraction isn't serious. One in 20 either doubted insurers would ever find out or believed "their mistruths would bear no consequence."
I suggest a better strategy: Learn the ways you can have your young driver trim insurance rates by reading our story "Cheap insurance for young drivers."
Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's. Follow him on Twitter @destoups.