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Fake car insurance claims 'cost £1.25bn a year'

By Tom Farley, Tue 31 Aug 2010 - Published in Car Insurance

Honest drivers have to pay out a collective £1.25 billion every year because of people putting in fraudulent car insurance claims, it has been claimed.

Research carried out by Co-operative Insurance found around £50 of each of the UK's car insurance policies is used to subsidise fake claims and accidents involving uninsured drivers.

The report also pointed out that this would pay for an extra 52 days cover through the average annual policy.

In addition, the study showed that 23 per cent of young drivers admit to getting behind the wheel without either car insurance, a valid licence or MOT.

Tim Franklin, chief operating officer at Co-operative Financial Services, commented: "Millions of people are deliberately flouting the law by not insuring their cars at massive cost to honest road users and the wider insurance industry, posing an unnecessary and unjustified risk."

A recent report by moneysupermarket.com found that automatically renewing car cover will cost drivers £233 more for their policy than it did last year.