There are plenty of different types of insurance fraud, including the ‘ghost broker’ scam.
This is essentially where drivers are scammed through a third-party selling them fake or misrepresented insurance policies.
We discuss what they are, how to avoid them and what to do if you do think you’ve fallen victim to a ghost broker scam.
What's ghost broking?
Drivers looking to save money on their car insurance have been lured in with cheaper car insurance promises from online ‘ghost brokers’.
But the people selling these policies are posing as insurance brokers and selling fake insurance policies.
If a driver needed to make a claim with one of these policies, it would be invalid and you wouldn’t be able to resolve your claim. This could leave you massively out of pocket.
The Insurance Fraud Bureau (IFB) said these fake policies are either:
- bought from legitimate insurance providers using false information, and then doctored before being sold on to unwitting drivers, or
- are simply forged replicas
How to avoid buying a fake insurance policy
To avoid buying a fake policy, you need to follow some important rules:
- Find a legitimate broker on British Insurance Brokers' Association website and check your broker is registered with the Financial Conduct Authority (FCA).
- Beware of buying insurance policies from unusual sources like through social networks or newsagents.
- Check your insurance provider is a Motor Insurers' Bureau (MIB) member.
- You can check if your car is insured and registered on the Motor Insurance Database.
While the IFB is warning people to be aware of buying insurance through social media sites, more and more insurance companies (including us) advertise insurance products online.
If you’re unsure if the ad is from a legitimate company, contact the insurer directly for confirmation or visit the FCA website linked above.
What happens if I buy a fake insurance policy?
The consequences of taking out fake car insurance are like the penalties of driving without insurance – you won’t be covered to drive and so would be breaking the law.
If you're caught driving without insurance, you could face:
- police seizing your car
- paying a £300 fixed penalty notice
- responsibility for any damage caused while driving without valid insurance, which could include hefty compensation claims if someone is injured in an accident
You will also have to buy a legitimate insurance policy and potentially hand over at least £150 to get your car back from the police compound if your vehicle is seized.
What to do if you suspect you’ve been scammed
If you suspect a ghost broker is trying to contact you, call the IFB bureau on 0800 422 0421.
You can also speak to ActionFraud, who can support you with reporting the crime and what the next steps are.
We also understand being a victim of a scam like ghost brokering can be really distressing. If you need some extra support after it’s been resolved, you can speak to Victim Support.
