Running a car tends to be expensive, so it’s no wonder drivers are always on the look out for ways to trim their costs. With insurance often one of the biggest overheads for car owners, it’s also one of the areas that’s potentially the easiest to save cash.

There are lots of ways to cut your insurance bills, with shopping around being at the top of the pile. But when you’re doing your price comparisons it’s essential that you don’t get duped by a scammer – or ghost broker – selling you a non-existent policy.

According to Action Fraud, an estimated 20,000 motorists could be driving around without insurance because of ghost brokers, but the Association of British Insurers reckons the figure could be significantly higher.

Ghost brokers work by offering cheap insurance to car owners – often vulnerable ones such as young drivers or foreign workers who don’t speak very good English. The former are often desperate to find a source of cheap insurance cover while the latter may struggle to comprehend the difference between a genuine insurer and a scammer.

The scammers create a professional-looking website then invest in some online advertising to lure people in. Sometimes they draw in punters through spam emails or they might communicate via free internet messaging or in chat rooms.

Ghost brokers have even been known to sell their wares by approaching people in pubs, claiming they can offer cut-price insurance cover. What they won’t do is appear on price comparison websites and they certainly won’t take out any costly print advertising.

The scammers won’t have credit card facilities as that would make them very easy to trace, plus they’d have to comply with a whole raft of rules and regulations. As a result they’ll insist on being paid in cash or by bank transfer – which for a professional company should set alarm bells ringing.

Sometimes the brokers will take out a genuine policy on your behalf, but once you’ve coughed up for it they’ll cancel the policy and get a refund on it, leaving you uninsured. Alternatively, they might take out a genuine policy, but with your details changed so the premium is lower. So if you’re high-risk because of your age, occupation, postcode or your car, they’ll change these details so although you’re theoretically insured, you’re actually not.

Just last month the Association of British Insurers disclosed that it’s investigating 26 ghost brokers, each of which is likely to have snared hundreds of drivers – and you really don’t want to be one of them.

A case study

In 2013, two men were jailed for setting up a ghost broking business that netted them £680,000. By setting up three fake businesses, more than 600 customers were conned by Danyal Buckharee and Giovanni Recchia.

They offered insurance at rates 15 per cent cheaper than any legitimate insurance company, their primary focus being new drivers who were quoted astronomical rates elsewhere. The two received jail sentences for their actions.

The implications

Take out cover with a ghost broker and you’ll actually be driving uninsured. The police use ANPR (Automatic Number Plate Recognition) cameras in their cars and on the roadside, to establish which cars are being driven even though they’re not insured.

If you’re driving along and a police vehicle (which may be unmarked) spots your car being driven without cover, they’ll pull you over. If you can’t convince them that you’re actually insured, your car will be seized there and then.

You’ll then have to pay to retrieve your car and you’ll also be fined £300 for driving with no insurance – and remember that’s an endorsable offence so you’ll also end up with six points on your licence.

How to protect yourself

The first thing to do is to ensure that you’re giving your money to a legitimate insurance broker, so check up on any company you’re tempted to give your money to. See if they’re part of a bigger insurance group, establish how long they’ve been trading and look online for some reviews of the company. If you can’t find any other existing customers who have good things to say, be very wary about handing over your hard-earned cash.

It’s also worth checking the British Insurance Brokers’ Association website and while you’re at it make sure your broker is on the Financial services Register database and also ensure they’re a member of the Motor Insurers’ Bureau .

Once you’ve taken out your policy, check that you’re insured on the Motor Insurers’ Bureau database (www.askmid.com). All you have to do is enter your car’s registration details and confirm that the vehicle belongs to you, and you’ll be told whether or not your car is insured. This is the same database that the police use for their roadside checks, so if you’re in the clear on this database, you won’t be pulled for driving uninsured.

If you find that you’re not insured, contact Crimestoppers (https://crimestoppers-uk.org) as soon as possible, either via its website or on 0800 555 111. Report your broker and give the police every bit of help that you can. But what you absolutely mustn’t do is drive your car until you’ve taken out a legitimate policy on it.

Richard Dredge
October 2015