How to avoid bogus car insurance deals as 21,000 cases reported in the last year

Bogus car insurance deals advertised over social media are on the rise in the UK. Sean LaPointe takes a look at the numbers and how to avoid falling victim.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

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If you’ve ever been a victim of a scam, then you know how distressing it can be. In the UK, one consumer area where scams have become quite prevalent is car insurance.

One of the fastest-growing car insurance scams is ‘ghost broking’. This is a scam in which fraudsters pose as legitimate brokers and sell bogus insurance policies to unsuspecting people. They often do this through social media.

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New stats from the Insurance Fraud Bureau (IFB) actually reveal that bogus car insurance deals have more than doubled in recent years, with over 20,000 cases reported to the bureau in the last year alone. So how can drivers avoid falling victim to these scams? Let’s take a look.

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Rising cases of bogus car insurance deals

The IFB reports that in the last 12 months, it has received reports of 21,169 fraudulent car insurance policies that can be linked to ‘ghost broking’.

This equates to nearly 60 bogus policies being sold to unsuspecting buyers each day. Unsuspecting victims are left out of pocket and either without car insurance or with cover that is not suitable for their needs.

How scammers target drivers

According to the IFB, bogus deals are often advertised via social media platforms like Facebook and Instagram. Targets often range from young and inexperienced drivers (who often face higher premiums) to communities that are less familiar with UK insurance laws.

In the last few months, ghost brokers have particularly targeted the influx of newly passed drivers who might have been delayed by the pandemic in getting their licences.

Using social media, ghost brokers offer policies at a fraction of the cost of regular insurance policies.

They then provide victims with fake or altered documents or even take out a policy to obtain the necessary paperwork before cancelling it and pocketing the refund. They may also arrange coverage with a legitimate insurance provider but provide false information to obtain a lower premium.

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Consequences of falling victim to a bogus deal

A bogus insurance deal might not only leave you out of pocket. You could also face prosecution for driving without insurance.

Unfortunately, most people do not realise they have a bogus policy until they are pulled over by the police or when they file an insurance claim and are denied.

The penalties for being caught driving a car without insurance can be severe. To begin with, you could face a standard fine of £300 and six penalty points. If the matter goes to court, you could face an unlimited fine and/or a driving ban. Your vehicle could also be impounded.

A conviction for driving without insurance will also appear on your record and could impact your job prospects.

How to avoid falling victim to bogus deals

Here are a few tips to help you avoid falling victim to a bogus car insurance scam:

  • Avoid buying insurance via adverts on social media sites and on messaging apps like WhatsApp. Instead, only purchase car insurance via reputable sellers. When shopping around for a new deal, stick to reputable car insurance comparison sites like Confused.com and MoneySuperMarket.
  • If you are buying a policy through an insurance broker, check whether they are registered with the British Insurance Brokers’ Association (BIBA).
  • If you are buying directly from a particular insurer, check that they are a member of the Motor Insurers’ Bureau.
  • Check that any insurance advisers you talk to are registered with the Financial Conduct Authority.
  • Remember that if a deal sounds too good to be true, it probably is. No matter how tempting it might be to jump on it, ensure you do your research first. This includes checking the seller’s or broker’s website, phone number and UK address carefully to ensure that they are not fake.

If you suspect you have been a victim of a bogus car insurance deal, you can report it to the IFB’s Cheatline online or by phoning 0800 422 0421.

You can also report it to Action Fraud, which is the UK’s official national fraud and cybercrime reporting centre, by calling them on 0300 123 2040 or visiting their website

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