DRIVERS have been warned they could lose thousands of pound and end up with a fine after unwittingly buying fake insurance policies.
There has been a big jump in the number of motorists buying worthless car insurance policies, insurer LV said.
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Con artists known as “ghost” insurance brokers sell fake policies leaving victims out of pocket.
Many won’t even realise they have been scammed until they are stopped for driving without insurance.
Police can hit you with a £300 fine, plus six penalty points, if you are found to be driving without valid cover.
If this happens to you, you will then need to buy a new policy and could face higher premiums as a result of the penalties.
In the worst case scenario, if you have an accident while driving without valid insurance you could face a hefty bill for car repairs.
Previous research found ghost insurance fraud costs victims an average £2,250 each.
But this could easily rise to tens of thousands of pounds if there is damage for someone else’s vehicle or even injuries.
Without insurance you could be liable for all of it with no way of paying.
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One big warning sign that you are dealing with a ghost brokers is that they usually offer cheap insurance premiums that may seem “too good to be true”.
Victims are usually connected through social media or by word-of-mouth referrals.
They pretend to be legitimate, often using the name of well-known insurance companies.
But instead of arranging insurance, the scammers keep your money and issue fake insurance documents.
Or the policy may be taken out and cancelled soon after.
In other cases, the policy could have used false details to push the price down, making it invalid.
Insurer LV has seen policy fraud jump by a third in 2023. And has more than doubled the number of referrals it has made to the police over scam policies.
The insurer said scammers often target young and vulnerable consumers who don’t have a full understanding of buying insurance and are attracted by the low premiums offered.
In the last 12 months over 55,0003 fraudulent car insurance applications have been discovered, with ghost brokers linked to thousands of cases, according to the Insurance Fraud Bureau (IFB).
Jon Radford, head of Intelligence, investigations and data services at the Insurance Fraud Bureau, said: “The significant financial pressure that so many people are facing is sadly providing fertile ground for ghost brokers.
“These shameless fraudsters prey on the most financially desperate people, luring them in with too-good-to-be true car insurance deals on social media which are entirely fake.
“Not only are victims left hundreds of pounds out of pocket, but they can be stopped by the police and have their car taken away for no insurance.
“Ghost broking is a serious problem and we’re determined to tackle it.
“We’re actively investigating suspected ghost broking fraud networks in collaboration with police and insurers to protect more people from falling victim.”
LV is calling for tougher regulation of social meds platforms to help prevent ghost broking.
The warning signs of a ghost broker
If you’re unsure whether the company you’re dealing with is real or not, look out for these tell-tale signs:
- Extra cheap policy: If it’s too good to be true it probably is – don’t get lured by low premiums through a ghost broker because if you have an accident you won’t be covered.
- Asking for large admin fees: Genuine insurers or brokers are unlikely to ask for fees to be paid in to separate bank accounts, and this could be the sign of a ghost broker.
- Asking to meet for cash payments: Some fraudsters may even ask to meet for cash payments. A legitimate broker would not do this.
- Using comparison sites to get quotes: Real brokers have direct relationships with the insurers whose policies they sell and won’t be using a comparison site to source policies. It’s against the T&Cs of most comparison sites for anyone but an actual customer to use it.
- No landline phone: Fraudsters tend to operate through mobile phone, social media or messaging apps. But a genuine insurance firm should be contactable by landline.
- No website: Most professional companies have a website, but ghost brokers often just have a simple social media profile.
You can check if an insurer or broker is regulated by the Financial Conduct Authority (FCA) when buying insurance, so you don’t get caught out wasting money on a worthless policy.
Look up the company on the Financial Services Register on the FCA’s website and if you can’t find the company you are dealing with, it’s a clear red flag.
If you think you have been a victim of ghost broking or insurance fraud, you can report it to the confidential IFB Cheatline, powered by CrimeStoppers, on 0800 422 0421.
