No Kidding – Average Age of Child on Parent's Car Insurance
is 31
Released
on: October 29, 2009, 4:23 am
Author: uSwitch.com
Industry: Financial
In the past year the average age
of a child named as a second driver on their parent's car insurance policy has shot
up from 25 to 31 years old, according to new research from uSwitch.com.
As the recession takes its toll on the Bank of Mum and Dad, 10
million drivers (39%) have a second named driver on their policy
and 2.5 million (10%) of these are offspring.
Being named on a parent's policy
is a legitimate practice, providing that the child in question
is not the main driver of the vehicle. However, with insurance
premiums on the up, high petrol prices and other escalating costs,
keeping a car on the road has become challenging for many young
motorists. As a result, many are putting themselves on the wrong
side of the law by indulging in a fraudulent practice known as
'fronting'.
'Fronting' takes place when a
young person buys and registers a car in their own name, but the
insurer is falsely told that a parent is the main driver – and
cases have shot up since the onset of the recession. According
to the Association of British Insurers (ABI), 'fronting' and other
forms of insurance fraud have increased by 30% since 2007 and
the cost of undetected fraudulent general insurance claims is
now estimated at £1.9 billion a year, up 24% from £1.6 billion
two years ago.
Ultimately consumers end up paying
the price for this activity - insurance fraud now adds an average
of £44 a year to every household's general insurance costs.
In addition to 'fronting', some
young motorists are taking cost cutting to an extreme with as
many as one in five (250,000) 17-20 year olds driving
without insurance, according to the Motor Insurers' Bureau
(MIB). In the current economic climate it's also unsurprising
that many feel forced to downgrade their type of cover to the
more affordable 'Third Party'.
Young
drivers are not alone in this - one in five (20%) of all third
party policy holders have opted for a reduced level of cover because
they are simply unable to afford fully comprehensive cover in
the current financial environment.
Mark Monteiro, insurance expert
at uSwitch.com, comments: "Not only are hard-up 'kidults'
living at home for longer, but they are hanging around on their
parents' insurance policies for longer too. It is no secret that
younger drivers pay far higher premiums than older motorists because
of the higher risk involved – but many are now getting around
it by becoming a named driver on their parents' policy instead.
The practice becomes illegal though when a younger motorist buys
and registers a car in their own name, but the insurer is told
falsely that a parent is the main driver.
"'Fronting' is a serious fraud
and penalties for being caught could be severe. If detected, insurers
can refuse to pay out for any claims or can settle a third-party
claim and recover the cost from the parent as the policyholder.
If the insurer declines a claim, the young driver could be treated
as uninsured and could be fined heavily and receive six penalty
points – resulting in an automatic ban for new drivers as well
as setting them up for higher insurance costs in the future.
"Insurance fraud simply adds to
the overall cost of insurance – in other words consumers end up
picking up the tab. And ultimately, committing insurance fraud
is not worth the risk. If affordability is an issue, there are
steps you can take: look at increasing your excess, downgrade
your cover, trade your car in for one in a cheaper insurance class,
but above all shop around for the best deal. You could save up
to £160 by taking this last step alone."
See
the full version of this press release.
For
more information please contact: Jo Ganly 0207 802 2915 / joganly@uswitch.com
About
uSwitch: uSwitch.com is a free, impartial online and
telephone-based comparison and switching service, helping consumers
compare prices on gas, electricity, water, heating cover, home
telephone, broadband, digital television, mobile phones, personal
finance products and car insurance.
2012
