Would you break the law to get cheaper car cover?

Would you break the law to get cheaper car cover?
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While we all like to save a few dollars here and there, especially if we’ve just forked out for a car loan, there are right ways and wrong ways to do so. “Fronting” definitely comes under the latter category and can land you in some serious hot water if your car insurer finds out.   

The practice of “fronting” describes when a person falsely lists an experienced driver – usually a parent – as the main driver of a car to snare a cheaper car insurance policy.

A study in the UK found that up to 10 percent of parents insured their child's car in their own name and listed their son or daughter as a secondary driver. In addition, 27 percent of respondents said they would consider fronting to reduce insurance costs.

There are no statistics on how widespread the practice of fronting is in Australia, although AAMI spokesperson Reuben Aitchison admits: "I'm sure it happens."

But there are good reasons to resist the temptation of fronting car insurance. For starters, fronting is illegal. Knowingly lying or misleading your insurance company constitutes fraud, which is an offence. It may not necessarily land you in jail, but it can wipe out your insurance.

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That's because if the actual driver, who is listed as a secondary driver, has an accident the insurance will be invalidated – leaving you with massive accident bill and lost money in insurance payments washed down the drain.

"If you misrepresented anything to your insurance company, in many cases it can void the policy in the event of a claim," Aitchison says.

The Insurance Council of Australia (ICA) advises against fronting for the same reason. An ICA spokesperson said: "Vehicle owners who obtain cheaper car insurance by listing a more experienced motorist as the primary driver are taking a serious financial risk.

"Misrepresenting the details of a driver for an insured vehicle can be grounds for a claim to be questioned, or denied, the insurer has made a decision to offer insurance based upon the information that was declared at the time the policy was prepared."

Insurance companies have also gradually altered their policy regulations to further invalidate any savings benefits to be claimed through fronting. AAMI, for example, calculates car insurance costs based on whether the insured vehicle will be driven by a driver aged under 25, even if they are not the main driver. NRMA, on the other hand, is promoting the fact that its comprehensive car insurance policy covers anybody who drives your car – even if you haven't nominated them.

So if you have blown the budget lately and do want to save in future, your insurance is not the place to start skimping. 

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