What is ghost broking?

Why do I need to worry about ghost broking? 

With car insurance prices on the rise, it’s no surprise drivers are looking for discounts where they can get them. Unfortunately, if it seems too good to be true, it normally is.

While most people think of insurance fraud as unscrupulous drivers making false claims, there’s a different type of insurance scam where drivers themselves are the victims.

What is a ghost broker?

Ghost brokers are the fraudsters behind ghost broking. 

The scam works in one of two ways:

• Policies are bought from legitimate insurance companies using false information and then doctored before being sold on to customers

• Fake policy documents designed to look like they have been issued by legitimate insurance companies are created and sold on to customers 

Who do ghost brokers target?

So-called ‘ghost brokers’ target drivers looking to get a good deal and sell them fake or invalid insurance policies that aren’t worth the paper they’re written on.

• Ghost brokers will often target higher risk drivers, claiming to act as an intermediary between the driver and the insurer. 

• They often advertise on social media, forums and even around universities and pubs, and lure people in with the promise of cheap premiums

How can I spot a ghost broker?

While fraudsters have many inventive ways of ripping off innocent drivers, there are three main methods ghost brokers use to trick drivers into buying fake insurance policies:

Cancellation and ghost brokers

The ghost broker acts on behalf of the driver, purchasing a valid insurance policy from a genuine provider. 

Once the driver pays the broker for the policy – and sometimes for their ‘broking services’ – the broker will then cancel the policy and pocket any refund. The driver is unaware but is actually driving uninsured.

Forgery and ghost brokers

The scammer will forge insurance documents including the driver’s details. With advances in technology, these fake insurance documents can look very convincing and are often designed to imitate papers from reputable insurance companies.

Falsification and ghost brokers

The ghost broker purchases a real policy from an insurer, but will provide false details to get an attractive price for the driver. 

• This scam is often used on drivers with typically expensive premiums, for example those with a history of claims or penalty points

• The fraudster will take out a policy by giving the insurer details of a low-risk driver

• They can then doctor the policy documents to include the driver’s real details, making it seem like the policy will be valid

In all these cases, the driver will be left with no valid insurance policy. Many victims of ghost broking don’t realise they don’t have genuine cover until they get stopped by the police or need to make a claim.

Covid-19 and ghost broking 

There has been an increase in ghost broking following the pandemic. This is because

• Drivers may be keen on searching for new insurance 

• Many drivers are reeling from the pandemic’s financial impact

• They may go to desperate lengths to secure cheap policies

The situation has prompted the Insurance Fraud Bureau (IFB) to remind car insurance holders to practice due diligence in looking for a new policy.

What happens if I’ve accidentally used a ghost broker?

If you’ve bought a policy from a ghost broker, you won’t have valid insurance cover — which is a legal requirement.

From a legal point of view, unknowingly buying a fake policy is the same as having no policy at all, and you could face penalties including a £300 fine, six penalty points and your car being impounded.

You’ll also need to pay out for a valid insurance policy to make sure you’re covered in the future.

• Your car may be seized by police and impounded

• You'll pay a fixed penalty notice of £300

• You will get six penalty points on your licence

• You'll have to buy valid insurance 

• You may have to pay around £150 to get your car released 

• You will have to pay for any damage you cause while driving without insurance, including compensation for injuries and medical treatment

How can I protect myself from ghost brokers?

To ensure you aren’t caught out, the Insurance Fraud Bureau (IFB) urges drivers to carry out essential checks before taking out a policy. 

Stephen Dalton, IFB head of intelligence and investigations, explained that it’s “natural” for drivers to look for the best deals given the economic uncertainty.

“It’s certainly possible to get a good deal, but unless checks are made to know cover is provided by a genuine insurer, drivers run the risk of falling victim to a ghost broker.”

How to make sure your insurance policy is genuine

If you suspect you may have bought a fake policy through a third party, there are a few ways you can check.

Contact the insurer

The ghost broker will usually have set up a policy with a well-known provider (or claim to have done so). The insurer should be able to tell you whether you have a valid policy with them.

Check your insurance status

You can go on the Motor Insurers’ Database. This will show whether your car is insured, but not whether your correct details were used on the application, so it’s still best to contact the insurer if you suspect you’ve bought a fake policy.

Know who you are buying insurance from

Of course, the best way to avoid being ripped off is by buying insurance from a reputable source. You can compare insurance quotes from leading car insurance providers online.

If buying through a broker, check they’re registered with British Insurance Brokers’ Association (BIBA)

If buying directly through an insurer, check they’re a member of Motor Insurers’ Bureau (MIB)

Check your insurance advisor is registered with the Financial Conduct Authority (FCA)

IFB encourages people to be vigilant to ghost broking scams and report suspicious adverts to the Cheatline on 0800 4220421.

How to find cheaper car insurance

If you are worried about being able to afford it, contact your insurer. Otherwise the following advice can help reduce your annual car insurance premium.

Make sure your car is secure 

Keep your car in a locked garage or secure driveway rather than on the road. Consider also installing alarms and trackers.

Check your mileage

If your car is going to be a second vehicle for occasional use, having a policy that reflects your limited annual mileage could save you money

Join a club

If you own a vintage car or distinctive model joining an owner club could save you up to 15% on specialist car insurance.

Consider an advanced driving course

You may even qualify for a discount if you have previous experience of driving performance models. Consider taking an advanced driving qualification (link to advanced driving piece)

Don’t own a car

You don’t need to own a car to get car insurance. Unlike a full car insurance policy, you won’t build up a no claims bonus, but it does mean you can drive someone else’s car, as long as you have their permission. 

If you are only planning on borrowing a car you can also compare quotes for short-term or temporary car insurance

Consider multi car insurance

If your family own several cars it may be better to insure them via a multi-car insurance policy

Multi insurance might also be suitable:

• If you own more than one car

• If you’re a family with more than one driver

• If you’re a couple with more than one vehicle