The cost of motoring is high – especially for young drivers who are paying through the nose for car insurance. It’s why more and more of you are looking for ways to cut the cost. Alas though, that means there are also people out there who are willing to exploit such a vulnerability, including ghost brokers.
What are ghost brokers?
These are scammers who typically approach drivers between the ages of 17 and 25 via social media or messaging apps – think Instagram, TikTok and Snapchat. They promise cut-price insurance policies that will help solve the young driver’s financial woes.
The problem? These so-called ‘policies’ are entirely fake.
According to research by the Insurance Fraud Bureau and insurance company Aviva, the number of ghost brokers is on the rise, with reported cases increasing 22% since 2023. And business is booming for scammers, with Aviva revealing that one suspected broker made £150,000 hawking fake policies online.
The average cost of being scammed? Aviva says that stands at approximately £2,000 (this includes the cost of the fake premium itself plus ‘additional fees’).
How it works
Posing as legitimate insurance intermediaries, the brokers scam drivers by:
- Selling a non-existent policy: You pay your money and in return you get a document that isn’t registered with any insurance company.
- Falsifying details: The scammer creates a policy using ‘incorrect’ details to drive down the cost, making the policy void when you go to make a claim.
- The ‘cancel’ scam: The scammer secures a genuine policy – but immediately cancels it as soon as you pay them for the cover.
Regardless of how you are stung, the result is the same: you are driving without insurance, which is a criminal offence. Even worse, you’ll only discover this when you are stopped by police or attempt to make a claim.
No defence
Unfortunately, falling victim to a scam offers no legal defence as you are responsible for your own cover – and whether it’s valid – in the eyes of the law. This means you will face serious penalties from a £300 fixed penalty and six points on your licence (potentially meaning you need to retake your theory and driving test) to having your vehicle seized.
Take Amie Donaghey, 21, who bought a policy via a ghost broker. It reduced a £4,500 quote from high-street insurers to the seeming bargain price of just £700. Amie only discovered it was a con when she was stopped by the police and told that she had no valid insurance. This has left Amie with a criminal conviction.
“I saw the flashing lights behind me and I was going ‘oh, my God, what have I done?’. I got pulled over and he said ‘you’re not insured’.”
• Amie Donaghey
Protect yourself
Research by the Financial Conduct Authority (FCA) shows that almost half (49%) of young drivers have purchased car insurance via messaging apps or social media – but 39% say that they don’t know how to spot a fake policy.
Thankfully, there is help at hand to avoid being stung. You should:
- Never pay for a policy via bank transfer (identity theft is another ‘bonus’ for ghost brokers)
- Always double check with the insurance company directly that you are covered
- Any legitimate insurance broker should also have a website, phone number and address
- Remember if something looks too good to be true, then it probably is.
Finally, the FCA says that you can carry out a simple, fast check to see if a broker is registered with the authority by using its FCA Firm Checker here. Also, once you have your policy, head to the Motor Insurance Database here and double check your car is registered as insured.
“Tight budgets make cheap offers tempting – and scammers take advantage of that. Don’t get ghosted by a policy that doesn’t exist. Check the FCA Firm Checker before you buy. Driving uninsured could cost you far more than any premium.”
• Graeme Reynolds, Director of Insurance, Financial Conduct Authority
Know Your Code
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Image by Nano Banana 2