Motor Insurance

Nearly half of UK consumers think it’s OK to mislead insurers (but it really isn’t)

Insurance fraud is on the rise, and it's more serious than many people realise. NimbleFins explains the consequences, and how they can leave you worse off.

According to research, nearly half of UK motorists think it’s acceptable to fib or ‘misinform’ insurers in order to get cheaper car cover. But lying is not OK and the consequences usually leave you worse off. NimbleFins explain just how serious lying to your insurer is and offer tips to get cheap car insurance the right way.

Is insurance fraud really a problem?

Data from the ABI show that fraudulent insurance claims totaled £1.1 billion in 2021. Car insurance fraud is the most prevalent, contributing to £602 million (or 55%) of the total.

Interestingly, insurance fraud has decreased since before the pandemic, when overall insurance fraud claims were valued at more than £3 billion in the UK.

Despite the fall in insurance fraud post-pandemic, reports suggest that fraudulent insurance claims are increasing once again, surging more than 25% in the first 6 months of 2022 due to inflation pressures on the cost of living.

Many people incorrectly believe that insurance fraud is a ‘victimless crime’, but that's not the case. When there are insurance claims, insurers raise premiums for everyone to make up their losses. Insurance fraud adds to the incidence of claims, so we all pay more as a result.

What happens if you lie to your car insurance company?

Lying on a car insurance application is one of the most common forms of insurance fraud (in addition to making fake claims). People may do this in order to get a cheaper premium. But there can be grave consequences to doing so.

If you lie to your insurance they are well within their rights to invalidate your policy, leaving you uncovered. This means the insurer can:

  • Immediately cancel your car insurance policy
  • Refuse to pay out if you make a claim
  • Refuse to pay out if someone else makes a claim against you

Or, if they don't cancel the policy, they can increase your premium to reflect your true circumstances.

Having your policy cancelled by the insurer can also make it difficult for you to find cover in the future, especially from one of the large mainstream providers. In that case you could end up needing a specialist insurer to cover your needs, which would cost you more—ultimately defeating the whole reason for lying.

Plus, don’t forget that if your policy is invalid or voided, it’s as if the policy never existed. As far as the law is concerned, it’s the same as driving without insurance which can lead to a £300 fine and penalty points.

What are the most common lies to get cheap car insurance?

Some frequently told fibs include:

  • The car’s class of use—in other words, what the car is used for, for example, using your car for business reasons but not telling your insurer.
  • Modifications—adaptations can increase what you pay for insurance, so some motorists purposely fail to mention modifications to get cheaper car cover.
  • Where you keep your car overnight—for example, saying it’s parked in a garage when it’s actually kept on the street.
  • Who the main driver is—young drivers pay significantly more for cover compared to other age groups. To combat this, some parents list themselves as the main driver on their children’s policy (when they aren’t) in order to lower premiums, this practice is known as fronting.
  • Incorrect annual mileage—the figure you give doesn’t have to be accurate to the nearest mile, but insurers do expect motorists to give a realistic figure. If you think you’re going to go over your original estimation by some distance, just let your insurer know and they’ll adjust your policy to reflect that.

How to get cheap car insurance without misleading your insurer

Insurance is all about risk—the greater the risk of an accident and claim occurring, the more you can expect to pay. So, while there are certain things that affect the cost of insurance that you can’t change (like your age and address), there’s still lots you can do to get lower premiums, for example:

  • Pay for your policy annually to avoid interest fees
  • Increase your voluntary excess which lowers your overall premium
  • Add an experienced named driver to your policy
  • Upgrade your car’s security with an immobiliser
  • Choose a telematics policy (especially if you’re under 25)
  • Drive fewer miles if you can
  • Compare quotes from as many insurers on sites like NimbleFins where you can get a good idea of what represents value for money for your needs.
Erin Yurday

Erin Yurday is the Founder and Editor of NimbleFins. Prior to NimbleFins, she worked as an investment professional and as the finance expert in Stanford University's Graduate School of Business case writing team. Read more on LinkedIn.


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