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What is car insurance fronting?


Car insurance fronting is when a lower risk driver insures a vehicle in their name but the actual driver is someone else. It usually takes the form of an older driver fronting for someone who falls into a a higher risk category, such as a young or inexperienced driver.

Why do people insure their car under a different name?

The reality for many young drivers is that they have to pay more for their car insurance. Car insurance premiums are calculated based on a range of factors, including age and driving experience. Younger or inexperienced drivers present a greater risk to insurers because they’re still learning and, in general, may be more likely to be involved in an insured event. To save money, some well-meaning parents falsely declare to insurance companies that they drive a particular car more than their child.

Read AAMI’s Car Insurance Buying Guide For Young Drivers

At AAMI, we rate your premium off the highest risk and the lowest risk drivers named on your policy. You’ll find more info in the Product Disclosure Statement (PDS).

Why you shouldn’t engage in car insurance fronting

Car insurance fronting is illegal

Car insurance fronting is actually illegal, and may put you in a worse situation than you bargained for. Aside from leaving you with an invalid insurance policy, it’s also a type of insurance fraud. It could make it harder for you to arrange affordable insurance or to access other financial products, like credit cards or loans, in the future. It’s best to stick to the right side of the law.

You risk your claim being rejected

If you’re being purposefully dishonest with your insurer, you could have your claim rejected in the event of an accident. This could mean having to pay damage costs out of your own pocket. Then you’d really be up Ship Creek.

More ways to save on your car insurance

Though car insurance fronting may seem like a harmless way to reduce a young driver’s premium costs, it can end up costing you more in the long run. The good news is, there are a few ways young drivers can lower their premium without insurance fronting.

  • Buy your car insurance online and you may enjoy discounted rates. AAMI offers $50 off your new Comprehensive Car Insurance if you get a quote and purchase online.
  • Pay your premiums annually. Some insurers may charge you less if you pay annually as opposed to on a monthly basis, so it’s worth checking with your insurer.
  • Take advantage of your insurers safe driving rewards programs. AAMI offers a Safe Driver Rewards discount for every consecutive year you drive safely and when you don’t make a claim.
  • Vary your excess to save on your premium. As a general rule, the higher the excess, the lower the premium. Just remember that, in the event of an accident, you may have to pay that full excess amount, so make sure it’s something you can afford.
  • Check whether you’re eligible for a safe driver rewards program. For example, young drivers can undertake the AAMI Skilled Drivers Course and, on completion, may receive a 10% discount on their AAMI Comprehensive Car Insurance premium. See whether you, your child or grandchild is eligible!

Here at AAMI, we encourage you to disclose any information required for a new insurance policy as accurately as you can. If you’re unsure or need to talk something through, get in touch with our friendly team today!

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Insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI. Any advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. Please read the relevant Product Disclosure Statement before you make any decision regarding this product. The Target Market Determination is also available.