Car insurance may cost more from a reputable dealer than so-called ghost brokers but purchasing a false policy could have devastating consequences. Drivers who purchase the fake schemes will not have any valid car insurance cover and could even face police action. Car insurance is a legal requirement and any motorists who have purchased a false policy will be seen as having no insurance at all. Police could even decide to issue a £300 fine for drivers with invalid policies and could even impound the vehicle.
These ghost brokers will usually target unsuspecting drivers by offering cheap premiums and budget costs.
They can use individuals from social media forums and even around pubs as they claim to act as a middleman between the driver and the company.
Ghost brokers have a variety of ways to operate but each one will result in the driver having no official or legal car insurance policy in place.
The scammers may purchase a valid policy and once the driver pays the broker for the service they will then cancel the policy and cash in on a refund.
Criminals could also decide to forge insurance documents to trick drivers into believing they are signing real forms.
The brokers can also trick insurance providers into giving drivers a better deal by lying about important information to bring down prices.
Fraudsters will then put a policy and not declare any high-risk tokens such as penalty points or driving offences. They can then write down the driver’s real details and make the policy look valid.
Data released by Action Fraud revealed over 850 cases of ghost broking and been reported to the action group in the last three years.
Average total losses from the scams were £631,000, wth individual drivers losing on average £769 each as they jumped to sign up to the budget and ultimately false policies.
Action Fraud claims social media is one of the leading tools for ghost brokers to operate within and warn men in their 20s are usually highly targeted.
Detective Chief Inspector Andy Fyfe, Head of City of London Police’s Insurance Fraud Enforcement Department, claimed in a statement that the policies given out by ghost brokers are not worth the paper they are written on.
He added: “As well as the personal harm experienced by victims, ghost brokers also cause financial harm to the insurance industry, driving up the cost of insurance premiums for all motorists.
“While an offer of cheap car insurance may seem tempting, falling victim to ghost broking will end up costing you far more in the long run – both in terms of money and your licence.”
The RAC urges drivers to check whether a broker is listed on the British Insurance Brokers’ Association website to verify their credibility before purchasing a policy.
They say if a potential broker is not listed, doesn’t have their own website and only discusses a mobile phone mummer or email address the policy could be a scam.
Drivers can check to see whether their car is insured on the Motor Insurers’ Database.
However, the service will only show whether your car has been insured and will not reveal if the broker has amended your details to bring down premiums and invalidate your policy.
Motorists should then contact Action Fraud and the Insurance Fraud Bureau to report the situation and hear advice on what to do next.