Warning over ‘cheap insurance’ offers that could land you in court

A ghost broker warning has been issued

Often the victim of ghost broking doesn’t realise they’ve bought a fake policy until they make a claim (picture posed by model/Alamy/PA)

A warning has been issued over ‘cheap insurance’ offers.

“Ghost brokers” will offer insurance deals at significantly lower costs, often through social media. They could be particularly appealing to younger adults, such as new students heading to university, as they tend to pay more for motor insurance policies, due to higher accident rates among this age group generally.

In reality, ghost brokers are not brokers at all. Fraudsters may forge documents or buy policies from legitimate insurance companies using false information to reduce the premium and then doctor them before selling them on. Or they may take out a genuine policy before cancelling it soon after and claiming the premium refund – plus the victim’s money.

A recent survey from YouGov indicates one in five (19%) 18-24-year-olds now use social media to search for car insurance deals, a place which is a prime hunting ground for ghost brokers.

The research was carried out for the Insurance Fraud Bureau (IFB), which says reports of people being duped by fake motor insurance deals sold by ghost brokers on social media rose by 6% in 2023, compared with the previous year.

Jonathan Purvis, senior policy adviser for general insurance at the Association of British Insurers (ABI), says: “As budgets tighten and diaries fill up this autumn, the last thing university students and young people want to worry about is falling foul to fraudsters.

“It’s important to remember that anyone, no matter your age, can be a victim of insurance fraud,” he adds. “Beware of offers advertised on social media and contact insurance companies directly or check the Financial Services Register to verify broker details. The golden rule is to never act in haste – if a deal seems too good to be true, then it probably is.”

Often, the person who has bought a policy from a ghost broker doesn’t know it’s fake until they try to make a claim, or they are stopped by the police.

The consequences of falling for a ghost broking scam can be very serious, not only leaving victims out of pocket but also leaving them at risk of having their vehicle seized for driving uninsured.

Be cautious of offers on social media (Alamy/PA)

If the police stop a driver with fake insurance, they could face the same consequences as other uninsured drivers. This includes their car possibly being crushed and facing court, where they could get a driving ban and be fined. And if the holder of the fake policy ends up in an accident, they could be liable to cover the costs of injuries or damage caused.

Here are some tips from the ABI to stay safe from ghost brokers:

1. Be cautious about offers advertised on social media.

2. Use the Financial Conduct Authority’s Financial Services Register to check if an insurance broker is authorised, or see if they are registered with the British Insurance Brokers’ Association (BIBA). Check BIBA’s website for a list of authorised insurance brokers.

3. Look out for people claiming to be brokers who provide a mobile number or messaging app as a primary means of contact.

4. Consider contacting the insurance company directly to verify details.

5. If you have information about ghost brokers, contact the IFB’s Cheatline either online or by calling 0800 422 0421.

6. And as always, remember that if a deal looks too good to be true, it probably is.