Is your cheap car insurance too good to be true?

The cost of car insurance admin fees

Drivers are being warned to avoid so-called ‘ghost brokers’, who pose as legitimate car insurance brokers to sell forged or invalid policies.

Unsuspecting drivers are lured by cheap premiums that turn out to be too good to be true.

Young drivers aged 17 to 24 are most likely to fall victim to ghost brokers. Facing higher premiums, and armed with a tight budget, they’re attracted by the promise of a good deal.

They’re also likely to be active on social media – a prime hunting ground for the insurance scammers.

Non-English speaking communities are also at risk, according to Action Fraud.

Victims will be unaware they don’t have genuine cover until they submit a claim or are stopped by the police for driving without insurance. Although the police will be sympathetic, the consequences can be the same as driving uninsured.

No-claims bonus savings on car insurance

Sanctions include a fine, penalty points, disqualification from driving, a criminal record, and the risk of having a car seized by the police.

Fleur Lewis, head of fraud detection and prevention at GoCompare, said: “Younger, less experienced drivers pay more to insure their cars – which makes them particularly susceptible to adverts for heavily-discounted insurance.

“Ghost brokers often operate on social media, especially Facebook and Instagram, where they often use imagery and logos of established insurers to enhance their believability.”

Ben Fletcher, director of the Insurance Fraud Bureau (IFB), added: “Ghost broking is a serious issue, which shows little sign of slowing down. A third of all our investigations are focused on bringing ghost brokers to justice.”

How a ghost broker defrauds a victim

Ghost brokers typically defraud victims in one of three ways:

  • Forged insurance documents.
  • Manipulating the customer’s details to lower the premium. This could be done by using fake no-claims discount letters or by supplying a low-risk address.
  • Using the identity of an unauthorised third party, before cancelling the policy to pocket the refund on top of the victim’s fee.

How to spot a ghost broker

  • Be wary of unsolicited cars from insurance brokers – authorised firms are unlikely to cold-call potential customers.
  • Ghost brokers will use social media, pubs or adverts in newsagents or universities – be on your guard.
  • Check to see if the broker has an office address and landline telephone number.
  • Is the broker on the Financial Services Register and authorised by the Financial Conduct Authority or the British Brokers’ Association?

If you suspect you have been contacted by a ghost broker, report it to Action Fraud or to the Insurance Fraud Bureau’s Cheatline.

Remember, if it sounds too good to be true, it probably is.

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