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.
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. 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.
To avoid any insurance cover problems, fleet managers need to declare everyone who could be driving the cars on the insurance policy.
This could see the end of young drivers borrowing their parents rather nice Aston Martin. Shame
Jackie Violet - Female First