What is Car Insurance Fraud?

Car insurance fraud is a significant issue in the UK. In 2023 alone, more than 45,000 fraudulent claims were made, totalling £501 million – an 8% increase from 2022.

But what exactly is car insurance fraud? Are there various types? And how can you protect yourself against it? Discover all the essential information in our comprehensive guide.

What is car insurance fraud?

Car insurance fraud can happen in two main ways:

Giving false information: This involves giving inaccurate information to an insurer, whether it’s a home address or claims history. Someone might do this to get a cheaper premium.
Making a fake claim: This involves lying to get money from the insurance company.

Both types of fraud are serious crimes and can lead to severe consequences, including legal action.

What are the different types of car insurance fraud?

There are many different types of car insurance fraud, including:

ID theft

ID theft happens when criminals steal personal information like names, addresses and birth dates to commit fraud. They might use these details to make false claims or get fake insurance policies. Scammers often get this data through hacking, phishing or buying it on the dark web.

You can protect yourself by:

Protecting your passwords and enabling two-factor authentication
Being cautious when using public Wi-Fi
Downloading software updates
Being careful when sharing personal information online
Staying informed about cyber security
Not ignoring warnings (like if your passwords are part of a data leak)

Ghost broking

Some scammers pretend to be real insurance companies and offer deals that seem too good to be true. They give you fake policy documents and take your money, but you won't actually be insured because the policy isn't real.

Fronting

Fronting happens when someone is listed as a secondary driver on an insurance policy, but they are actually the real owner.

For example, if a grandparent puts their grandchild on their insurance as an additional driver instead of getting the grandchild their own policy. It may result in cheaper insurance for the grandchild, but this is fraud, and the grandchild should have their own policy.

Application fraud

Application fraud happens when someone isn’t truthful or leaves out important details when applying for car insurance. This can include:

Address misrepresentation
Lying about driving history
Not mentioning past claims or convictions
Misleading about where you park your car (like saying it’s in the garage when it’s not)

If your insurance company discovers you’ve deliberately provided false information, they might cancel your policy without refund, not pay your claim and flag your details with law enforcement and fraud prevention databases.

Crash-for-cash

Crash-for-cash, sometimes called an “induced accident” is a scam where someone causes someone else to hit them on purpose to blame another driver and claim insurance money as a “victim”.

For example, a driver might suddenly brake to cause a crash, hoping the car behind can’t stop in time. Another trick is flashing headlights to let a car pull out from a side street, then crashing into them on purpose when they pull out.

Imaginary passengers

There are two types of fake passenger claims:

1. Ghost passengers: When someone tries to make an insurance claim for injuries to a passenger who wasn’t actually in the car during the accident. If the supposed passenger agrees to lie and say they were in the car, they could get into legal trouble.

2. Phantom passengers: When someone in the vehicle swaps their identity to another individual and that person makes the claim.

Vehicle dumping

Vehicle dumping is when someone gets rid of their car, like by abandoning, sinking or burning it, and then claims it was stolen to get money from their insurance.

Exaggerating claims

Some people might pretend an alleged injury, like whiplash, is worse than it is or exaggerate the damage to their belongings. They do this to get more money from their insurance. However, it's harder to fake a whiplash claim now because you need medical proof of the neck injury.

What are the legal consequences of committing car insurance fraud?

If you’re found guilty of insurance fraud, you could face several serious consequences, such as:

Your policy is cancelled with no refunds
Claims are not paid out
You’re added to industry fraud databases (which can make getting car insurance in the future harder and more expensive)

How do I ensure I have a valid policy?

To avoid breaking the law and committing car insurance fraud, always give accurate information when you apply for a policy. Don’t be tempted to tweak details like your claims history or giving a false address to try and get a cheaper premium.

How can I avoid being part of a fraudulent claim?

Car insurance fraud can harm honest drivers, especially those targeted by staged or fake accidents. Here’s how you can protect yourself:

Use a dash cam: This device can discourage scammers and provide video proof if an accident happens.
Stay alert on the road: Drive carefully, stick to the highway code and watch out for any dangers or strange driving from others.
Keep your distance: Maintain a safe gap from other cars, especially at junctions and roundabouts. Follow the safe stopping times recommended by the Driver and Vehicle Standards Agency (DVSA): 2 seconds in dry weather, 4 seconds in wet weather and 20 seconds in icy or snowy conditions.
Collect evidence: If someone hits your car and it’s not your fault, gather as much proof as you can. Take photos so the other party can’t exaggerate damage, obtain CCTV footage and get witness contact details. You should also look inside the other vehicle and get full details of everyone in it.
Get the other driver’s info: Make sure to collect the other driver’s details, including their insurance information and registration number. Consider if they seem unphased after the accident or have pre-written insurance details – these could be signs of a crash for cash scam. If you’re unsure, call the police.
Avoid ghost brokers: Make sure you buy insurance from legitimate providers and avoid ‘too good to be true’ offers as there are many fraudsters pretending to be genuine insurance brokers. Many ghost brokers will approach you via social media like Snapchat, Instagram, Facebook or TikTok. These insurance deals are unlikely to be genuine, so avoid them.

How do I report car insurance fraud?

There are a couple of steps to take if you think you’ve been a victim of car insurance fraud. The first thing you should do is call the police and report the accident. Then, gather evidence to support your case (photos, witness statements, etc.).

Once you’ve finished collecting evidence, contact your insurance provider and explain that you’ve been involved in an accident and suspect that it was intentional.

Saga customers can email fraud.champions@saga.co.uk to report insurance fraud. Alternatively, call the Insurance Fraud Bureau at 0800 422 0421 for help.

How do insurers identify fraud?

Insurers use several methods to spot car insurance fraud. After an accident, some may interview the driver who made the claim and compare their story with other evidence like police reports, CCTV footage and witness statements.

They might also check the claimant’s social media for any suspicious activity and look at databases that contain the person’s driving history.

At Saga, we may submit your details to fraud prevention agencies (including the Insurance Fraud Bureau) and other organisations to help us prevent fraud and money laundering.

We've taken steps to keep your personal data safe from being lost, misused or accessed without permission. Only employees, agents, contractors and other third parties who need to know for business reasons can access your data. They will follow our instructions and must keep your data confidential. If there's a suspected data breach, we have procedures to handle it and will inform you and the relevant authorities if required by law.

Who are Saga's car insurance policies underwritten by?

Saga’s car insurance policies, exclusively for people over 50, are unique products designed by us specifically for our customers. They are underwritten by a number of carefully selected insurers that provide high standards of quality and service.