449,000 People Refused Insurance

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According to the Association of British Insurers (ABI), around 449,000 people had insurance applications refused, in 2017, as they were either confirmed or suspected to be dishonest applications. Most of these cases were in relation to car insurance applications.

People think that nobody will find out if they tell a lie or bend the truth slightly on their application forms. Car drivers have been known to lie about their occupation, driving record and hiding previous claims or convictions in order to get a cheaper premium. Compare Car Insurance Quotes

Michael Masterson at Cover4Insurance explains that:

“this is a false economy as insurers may cancel your policy and/or refuse to pay a claim if you have provided false information to get a lower price.

People also don’t seem to realise that by failing to disclose or misrepresent information in your application, you are committing insurance fraud which your insurer may prosecute your for.”

In the UK, we have a specialist police unit dedicated to tackling insurance fraud called “The Insurance Fraud Enforcement Department (IFED)” which is funded by the Association of British Insurers (ABI) and Lloyds of London members. By committing insurance fraud, you could face criminal prosecution and a prison sentence. You can also expect it to be harder and more expensive to get insurance in the future. You may also find it more difficult to obtain credit such as loans or mortgages. You could also be hindering your current or future job prospects by committing fraud.

Common frauds on a car insurance policy are:

• Saying your car is kept on a driveway when it is actually kept on the road.
• How the car is used – For example if you have chosen “Social usage” this excludes any travel to and from work or other business use. Insurers rate premiums based on how and when you use your car. If you are commuting to work you are normally travelling at the busiest time of the day, therefore more at risk of an accident.
• “Fronting” – Where you list an experienced driver as the main driver when that will not be the case. For example: Where a parent lists a child as an additional driver on the car rather than the main diver when the child will be the person that uses the vehicle the most.
• Change their occupation to get a better premium
• Withhold information such as previous claims, damage, penalty points and driving convictions.

Any of these could be enough to invalidate your policy. If this comes to light when you make a claim, you could find that the pay-out is restricted or that your policy is declared void and no cover is in place.

People that commit insurance fraud are:

• Increasing premiums for everyone else as insurers incur additional costs in investigating suspected frauds or by paying false claims, which in turn leads to higher premiums for everyone.
• Slowing down the payment of genuine claims as insurers are spending time investigating false claims.
• Putting people’s lives at risk particularly through frauds such as staged motor crashes or induced road traffic accidents.
• Induced road traffic accidents: This is where a person deliberately induces an accident with an innocent motorist by provoking a collision to get a compensation payment for injuries, damage, hire vehicles, recovery etc.
• Staged Accidents: This is where 2 or more individuals will deliberately crash their vehicles into each other in order to make claims for damages such as injuries sustained, car hire, recovery, storage etc

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