The bogus car insurance broker scam

What is the car insurance scam?

The scam is very simple and plays on the public’s love of a bargain and the anonymity the Internet offers.

At its most basic the criminal sets himself or herself up as an Internet car insurance broker. He or she then gives car insurance quotes that are way below the going rate; the so-called ‘ghost broker’ achieves this either by omitting any information that would otherwise bump up the cost, or by simply issuing a motor insurance certificate without ever taking out the corresponding insurance.

The third, and most sophisticated version of the scam, involves the ghost broker taking out a genuine car insurance policy using authentic, un-doctored information. The victim receives a genuine car insurance certificate but the scammer then cancels the insurance policy shortly thereafter, pocketing the refund himself.

In all cases the victim is left without valid car insurance despite having paid the premium in good faith.

How you can avoid the driving licence scam

How common is it?

Estimates vary but it is thought that up to 20,000 motorists in the United Kingdom could be driving around without having a valid car insurance policy. 

Aside from leaving them at risk of losing their car’s value in the event of an accident or theft, the scam also leaves them at risk of being charged by the police with the offence of driving without insurance. If found guilty they face an unlimited fine, 6-8 penalty points on their driving licence and having their car seized. In some cases, they could even face having a discretionary driving ban imposed.

The scam also leaves the victim vulnerable to civil action in the event of an accident. Without insurance cover in place to make good any financial loss incurred by another person they could find themselves having to dig into their savings or even being forced to sell their home to pay the third party’s costs.

Saga Car Insurance: Join over a million drivers already benefiting from our outstanding cover and personal service for the over 50s. Get a quote and find out more!

What to do if you are involved in an accident

Who is most at risk?

The short answer is everyone. While younger drivers comprise the greatest percentage of those affected, ghost brokers are targeting everyone regardless of age and driving experience.

How can I avoid it?

You can avoid the scam by only using reputable car insurance providers that you have heard of.

If you haven’t heard of them you can search for them on the British Insurance Brokers’ Association(BIBA), the industry’s association. BIBA can check whether a broker is a member or can put you in touch with one of its members that is local to you.

You should also check that anyone claiming to be an insurance advisor is on the Financial Services Register and that the company you are insured with is a member of the Association of British Insurers.

And you can check that your car is insured by checking the industry’s database at askMID or by telephoning the insurance company direct to make sure that the policy is genuine and hasn’t been cancelled.

The easiest way to protect yourself though is to only use a reputable company that you have heard of - and accept that if a deal sounds too good to be true it probably is...

Saga Car Insurance: Join over a million drivers already benefiting from our outstanding cover and personal service for the over 50s. Get a quote and find out more!