Fronting puts insurance policies and young drivers at risk
2nd, October 2008
Managing directors and company owners are invalidating their business insurance policy by fronting young family members on their motor insurance, Norwich Union has claimed.
Fronting is an increasing problem in commercial motor insurance, where managers or directors use the business's policy to insure a person not directly connected to the company.
Mike Smith, commercial motor technical manager at Norwich Union (part of Aviva) said: “From the claims we have come across we have seen some devastating consequences as a result of fronting.
“The person being insured is usually a family member, often a 17 or 18-year-old son or daughter who has found it difficult or too expensive to take out their own insurance.”
Every day, four people are killed or seriously injured in crashes involving young drivers and 17-20-year-old male drivers are almost 10 times more likely to be killed or seriously injured than more experienced drivers.
He continued to explain that fronting is often seen as a lower cost alternative to separate motor insurance policies, however the risks to both the company and that young driver are “substantial”.
Although fronting has largely been a car issue, vans are also becoming an increasingly popular choice for young drivers.
“Fronting, in most instances, will invalidate the company insurance policy, leaving the business to pay for any damage to their vehicle. Also, if any other driver is involved in an accident, while the insurer will be required to meet any liability cost under the Road Traffic Act, they can seek recovery of any such payments from the policyholder.”
“It is not just money that is at stake, however. The safety of the young driver, other passengers and road users is a vital consideration,” Mike continued.
Similar Articles
- EPI ban is “devastating news” for borrowers
- £7m fine for Alliance & Leicester after serious failings in PPI sales
- Health lies invalidate insurance
- FSA publish insurance-selling code
- Drivers from multi-car households less likely to crash
- DfT to launch consultation on novice drivers
- MoJ reveal low LEI awareness
- Cover warning to thrill-seeking travellers
- Genetic markers spark insurance dispute amongst academics
- Insurers dismiss Ombudsman ruling
- Interresolve scheme secures new liability insurer backing
- Parabis Ltd launches professional indemnity claims management model
- Court of Appeal uphold industry-wide agreement between solicitors and insurers
- Kent earthquake rocks insurers
- Four people arrested in "cash for crash" investigation
- Law firm accuses insurers of "underhand tactics"
- ARC slams legal expenses insurance
- ATM attacks increase PI claims
- ABI sets up new committee
