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Fronting can put young drivers at risk fleets warned

21 October 2008

Managing directors and company owners are invalidating their business insurance policy, as well as putting their children at risk, by ‘fronting’, according to a warning from insurance giant Norwich Union.

‘Fronting’ is an increasing problem in commercial motor insurance, where managers or directors use the business’s policy to insure a person not directly connected to the company.

Mike Smith, commercial motor technical manager at Norwich Union, 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.

Every day, four people are killed or seriously injured in crashes involving young driversand 17-20-year-old male drivers are almost 10 times more likely to be killed or seriously injured than more experienced drivers.

“Although this may seem as though they are doing that family member a good turn by saving them some money, and the credit crunch may make this appear even more financially attractive, the risks to both the company and that young driver are substantial.

“‘Fronting’, in most instances, will invalidate the company insurance policy, leaving the business to pay for any damage to their vehicle. Also, if any other driver is involved in an accident, while the insurer will be required to meet any liability cost under the Road Traffic Act, they can seek recovery of any such payments from the policyholder.

“It is not just money that is at stake, however. The safety of the young driver, other passengers and road users is a vital consideration.”

Norwich Union says the ‘fronted’ vehicle can often be a high performance car and totally unsuited to the young driver’s experience, driving behaviour and attitude. And while ‘fronting’ has largely been a car issue, vans are becoming increasingly popular amongst young people for the extra space they provide for sports equipment.

“To avoid any insurance cover problems, fleet managers need to be open and up-front with their broker and insurer, and ensure they are aware of who owns and drives all vehicles insured on the company policy,” said Mr Smith.

“Brokers should ensure that fleet managers review company policy on who can drive company vehicles for social, domestic and pleasure use, including age of driver, and ensure adequate controls are in place including licence checking.”