Warning to the young: don't cut corners on car cover

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Insurers admit that it's hard to tell when fronting is going on – until, that is, a claim is received.

"People are at their most honest when they are calling initially after an accident," adds Mr Lewis. "They don't have time for a cover story, so this is often when they tell us they are the main driver, rather than their parent."

Even if the claimant doesn't come clean, there are some other key indicators. "Our claims handlers will look at where the accident occurred and compare it to the address on the insurance policy," Mr Lewis says. "For example, if the car is insured in a parent's name at an address in Newcastle but is involved in an accident in a university town such as Oxford, then fronting may be happening."

Fronting may also prove a false economy in the long run. Not only are you driving with insurance that is likely to prove invalid if you have an accident, but you will not be establishing the crucial no-claims record. "This is the passport to cheaper premiums. It's best to bite the bullet and start building it up as quickly as possible," says Erik Nelson from Norwich Union (NU), the UK's biggest insurer.

NU has adopted a novel approach to help younger drivers, aged 17 to 29, build up their no-claims: "We offer a rapid bonus scheme. Basically, you insure the car in a block of nine months, at the end of which you are credited with a full year's no-claims bonus," explains Mr Nelson. "In effect, you can build up a full five-year bonus in under four years."

But NU recently called a halt to its pay-as-you-go insurance initiative, which offered younger drivers the chance to save substantially on premiums. The scheme relied on GPS technology: the drivers would have a box installed and these would monitor their driving. At the end of the month, they would receive a bill based on the miles covered and the time of day the car was used. The idea was that motorists who covered fewer miles and drove at periods – during the daytime but outside rush hours – when it was statistically less likely they would be involved in an accident would not have to pay as much for car insurance.

"The scheme was open to young drivers and we were able to cut their premiums. We saw a 30 per cent fall in accident rates as people thought about their car use," says Mr Nelson. "We had hoped, though, that the car manufacturers would start offering the GPS boxes as standard. "Ultimately, the expense meant we had to call a pause."

As part of its Drive Time initiative, More Than uses the same technology to impose what amounts to a curfew on 17- to 22-year-olds: cheaper premiums are on offer in return for agreeing not to drive between 11pm and 6am. The GPS technology will allow the insurance firm to see if the car has been used during these hours, and a £25 penalty will be imposed. "People can drive during the night time," says Mr Maxwell at More Than, "but they will have to pay for the privilege."Continued...