Over the last couple of years you may have read about the fraudulent sale of insurance policies by unscrupulous insurance advisers. These individuals are often referred to as ghost brokers and usually arrange car insurance policies for a lower premium than legitimate companies charge through the likes of small advertisements and websites.
Such people, who fortunately are in the minority, tarnish the insurance industry’s otherwise good reputation. We thought it a good idea to highlight this type of fraud so that you, hopefully, do not fall foul of it. Far better to be forewarned than be faced with the problems it could present.
In December last year, the Insurance Fraud Bureau was, apparently, investigating an increasing number of ghost broker cases and, in 2012, fraudsters benefited to the tune of £500,000 in this way.
How are car insurance policies sold in a fraudulent way by ghost brokers?
Well, there are two ways this happens: –
1. A fake insurance policy is produced that has a perfectly legitimate insurance company’s details on it such as the logo and then it is sold to a client who is, in the first instance, none the wiser of the fraud.
2. False information is provided to purchase a genuine policy from a real insurance company. The policy details are changed in some way prior to being sold to a client.
What are the implications of being sold a fraudulent car insurance policy?
Unfortunately, there are several including: –
1. You will not be able to make a claim should you be involved in a road traffic accident and could be held responsible for third party injury/damage amounting to millions of pounds.
2. You will need to arrange a legitimate policy involving further expense.
3. You could be taken to court for driving without insurance.
How do you find out if the policy you have been sold is fraudulent?
Unfortunately, it tends to be either when you come to make a claim on the policy only to discover that you have no cover in place and have lost your premium(s) or when a police car pulls you over to notify you that you have no insurance according to the information that they have access to.
How can you avoid coming into contact with a ghost broker?
Prior to purchasing a car insurance policy you could check the Financial Services Register to make sure that the adviser you are dealing with is on it. All brokers will have an FCA number and this can then in turn be checked on the motor insurance database at www.fsa.gov.uk/register/home.do
Think twice before buying a policy in places like newsagents, clubs, pubs and on social networking websites.
What should you do if you think you may have been sold a fraudulent car insurance policy?
Every motor vehicle that is insured in the UK has a record of the insurance policy for it placed on the Motor Insurance Database of the Motor Insurers’ Bureau so you could check that database. If you find that your car is not listed then, unfortunately, it will not be correctly insured. Just because it is listed does not mean to say that it is a legitimate policy so you should contact the insurance company to check everything is in order including the personal details they hold.
Notify the police if you suspect that you have been sold a fraudulent car insurance policy by a ghost broker as well as the Insurance Fraud Bureau Cheatline on 0800 422 0421.
We hope that the above has proved informative.
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