Fronting Non-Insured Drivers Could Cost Companies

Posted by admin

September 24, 2008

According to a report by Norwich Union, managing directors and company owners are finding their insurance policies invalidated due to “fronting”. An example of fronting is when a businesses uses their policy to insure people not directly associated with the company, such as a teenage child.

A technical manager at Norwich Union, Mike Smith, 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.”

With the credit crunch hitting everyone from consumers to businesses, bosses think they are saving themselves, or their children, costly insurance premiums. However, if caught out, the company’s policy will be invalidated leaving the business to pay for any damages.

Fronting has increased among the commercial vehicles sector and it is recommended to be upfront with your broker and insurer about who will be driving company vehicles.

Norwich Union says this is not just a financial concern but many times young drivers are given vehicles that are “totally unsuited to the young driver’s experience”.

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