Taking out a policy for a newly-qualified driver can be a costly prospect, often running well over £1,000 even for just basic third-party cover, so it’s understandable that many will be on the lookout for any deals
Car insurance for young drivers can be very expensive (stock image)(Image: Getty Images/iStockphoto)
Passing a driving test is an exciting moment for any young driver. After hours upon hours of lessons and often a few attempts at the test, it’s understandable that they can’t wait to get onto the road and enjoy their newfound freedom.
But before they can do that, there’s the matter of insurance. Taking out a policy for a newly-qualified driver can be a costly prospect, often running well over £1,000 even for just basic third-party cover. So it’s understandable that many will be on the lookout for any deals on offer.
But the Financial Conduct Authority (FCA) is warning many are falling prey to so-called ‘ghost brokers’. One Birmingham driving instructor explained how the issue could lead young drivers at risk of losing a lot of money – and potentially even their licences.
What are ‘ghost brokers’?
MJ, who runs M J Learners in Birmingham, explained the issue on TikTok. He said the risk lies in policies not arranged through a legitimate website, as with most big-name insurers, but rather through mobile messaging apps or social media.
“They hook you up with a policy, which is then cancelled maybe a month down the line [or] two months down the line just so you’ve got that certificate to prove you’re insured,” he said. “The initial insurance quote is normally ridiculously cheap.
“I had a student contact me saying they can get insured on a SEAT Ibiza as a young 17 year old in Alum Rock (in Birmingham), for just a grand. Now, that immediately rings alarm bells to you.
“How they do it is they add it on to different addresses, different people’s names, they add on a bunch of fake details and information, they give you this cheap policy with the certificate, and then they cancel it later on so they get even more money back. So in the short run it saves you a lot of money, but when they then cancel it you’re driving around uninsured, so if you go past an ANPR (Automatic Number Plate Recognition) camera, or the police interceptors and things like that, your car is uninsured.”
Explaining how to protect yourself from falling victim to the scam, he continued: “Most insurance people have dedicated websites or dedicated offices so you can tend to verify that they’re real, they’re legitimate, and they’re safe. Ghost insurance is normally where you get given a number from your cousin who got insured off this guy, or this person gave me a cheap quote for this price, and you find them on social media, you find them on WhatsApp or a WhatsApp group, and that’s pretty much it. They don’t have anything that they can verify themselves with.
“I’m not saying that every person that sells insurance on social media is dodgy, I’m not saying that at all, but this is the majority of places where these ghost insurance brokers come from.
“So, if you’re a first time driver, you’re getting quotes come through and they’re ridiculously cheap, it might be worth double checking into them, seeing if they’ve got a registered office, seeing if they’re an actual insurance broker, and making sure it’s not just Harry from down the road who’s gonna hook you up with a good one-time deal to get your insurance certificate. Because if you do get caught uninsured, the consequences can be severe after you’ve put all of that time and effort into getting your drivers licence.”
The FCA said 49 per cent of drivers aged between 17 and 25 have bought insurance through social media or messaging apps, and 45 per cent said they generally trusted services bought this way. The organisation offers a checking service where drivers can confirm the organisation they are buying their insurance through is legitimate. It is available at https://www.fca.org.uk/consumers/fca-firm-checker
What are the penalties for driving without insurance?
According to gov.uk, it is illegal to drive on a road or in a public place without at least third party insurance in place. A vehicle being insured is not necessarily sufficient – the driver must also be correctly covered.
Driving without insurance can result in a £300 fine, and six penalty points on your licence. If the case goes to court you could be given an unlimited fine and be disqualified from driving.
Police also have the power to seize vehicles being driven without insurance and, in some cases, destroy them.
