Have you been up front?

Have you ever obtained car insurance naming yourself as the main driver to save your son or daughter money? If the answer is “yes” and your child is involved in an accident, you may find the insurers refuse to pay.

Young drivers who have just passed their driving test, particularly males, are often unable to afford to insure a car of their own.  Few insurers quote less than £3,500 a year even for low-value, low-powered vehicles.  This is because inexperienced, young drivers tend to crash rather a lot, causing big payouts for insurers.

Many parents therefore ‘front’ policies on behalf of their children.  Research by Co-operative Insurance found that over 40% of parents do this although their child is in fact the main driver.  In the future this is expected to rise to over 60%.

The problem is that most people don’t realise that obtaining a policy in this manner is fraud.  It’s unlikely that the Crown Prosecution Service would consider it in the public interest to bring a charge of fraud against policy holders, but the risk of an expensive civil claim is far higher.

Unless the car is involved in an accident and the police become involved, it is unlikely that the validity of the policy will be questioned.  But if the vehicle is involved in an accident and the young driver is considered wholly or partly to blame, insurers who suspect the truth might “void” the cover, leaving the parent (holder of the policy) and child with serious financial problems.  With young drivers being involved in so many accidents, this is a very real risk.

So if the insurance company won’t pay out, who does pay?

Clearly the first answer is the driver. But few young drivers have any money, which is why they couldn’t afford their own cover in the first place.  Might the car-owning parent have to pay – even if the child is over 18?  Case law suggests so.  If the owner of a vehicle ‘permits’ the driver to use it, the injured party may be able to sue the owner of the car direct without first suing the uninsured driver.

Imagine an accident resulting in permanent injury or even the death of another person. The total bill (including the legal costs of the other side) could run to hundreds of thousands of pounds.

What is particularly worrying is that car owners requesting a quote from certain insurance providers are regularly being told by the telephone adviser to name the parent as the policy holder to bring down the cost!  No doubt the insurers will deny all knowledge of these conversations if they refuse to honour a claim.

Given the genuine risk, it is worth asking yourself the question: Can I afford to ‘front’ a policy just to save my child a few pounds?

For further information contact Anton Balkitis or Lucy Wood on 0800 046 3066 or visit the website if you are looking for motoring solicitors.