Another damn insurance question!!!
Discussion
I was looking to organise the insurance on my wife's car, with myself and our son as named drivers. It's hard to say who's the main driver as we all drive it regularly as it's easier to jump into that than get my car out the garage. We will be donating the car to our son on his 21st in 8 months time so I thought to put the insurance in his name so he has a years NCB when he takes possession. My wife and I would also be named drivers on the policy as we'll continue to drive it. However I was told that the car had to be rgistered to my son to have the insurance in his name. I thought it didn't matter who was the owner, it was the main driver who had to have the insurance in their name, otherwise you could be in a position where you could be accused of fronting. Have things changed in recent years?
The main driver has to be the one who is insured primarily, exactly as you say to avoid fronting.
However, the insurable interest Act of 1774 stipulates thst to effect an insurance policy you have to be in apposition to suffer a financial loss from the potential loss. So as your son doesn't own the car, therefore can;t insure it in his name.
transfer it into his name now and it won't be a problem.
For spouses the point is moot as all property is deemed to be jointly owned in law, so there's no issue who owns it and who is named as the main driver.
However, the insurable interest Act of 1774 stipulates thst to effect an insurance policy you have to be in apposition to suffer a financial loss from the potential loss. So as your son doesn't own the car, therefore can;t insure it in his name.
transfer it into his name now and it won't be a problem.
For spouses the point is moot as all property is deemed to be jointly owned in law, so there's no issue who owns it and who is named as the main driver.
Just as R1 Loon says.
Also, he will need to have the insurance in his name to be able to gain 1 year NCB. By this I mean 'real' NCB that will be transferable between insurers, not a made up discount for being a named driver on someone else's policy.
You are right that parents are tempted to insure a car for their kids to drive however, this is not really the case these days. The question of 'how many cars are in the household or do you have access to is designed to combat this.
O
Also, he will need to have the insurance in his name to be able to gain 1 year NCB. By this I mean 'real' NCB that will be transferable between insurers, not a made up discount for being a named driver on someone else's policy.
You are right that parents are tempted to insure a car for their kids to drive however, this is not really the case these days. The question of 'how many cars are in the household or do you have access to is designed to combat this.
O
To answer the question, no your son does not need to be RK. To avoid fronting he needs to be the Policyholder and the Main Driver.
Not all insurers will like the fact that the answer to "Are you the owner and registered keeper" question is no. But many will be OK if the answer is "Spouse or family member". Might take a bit of phoning around. Just make sure they are the PH.
Usual principle is that the owner gets the cash in the event of a claim (total loss your lease car and you will find that out
). The feeling is that when the owner is mum or dad you probably won't get much dispute from the PH. Although as with many things, not every insurer bothers with that.
Not all insurers will like the fact that the answer to "Are you the owner and registered keeper" question is no. But many will be OK if the answer is "Spouse or family member". Might take a bit of phoning around. Just make sure they are the PH.
Usual principle is that the owner gets the cash in the event of a claim (total loss your lease car and you will find that out
). The feeling is that when the owner is mum or dad you probably won't get much dispute from the PH. Although as with many things, not every insurer bothers with that.Edited by Noger on Friday 30th April 20:56
Noger said:
To answer the question, no your son does not need to be RK. To avoid fronting he needs to be the Policyholder and the Main Driver.
No he doesn't. He needs to be the main driver. It makes no difference who the policy holder is. At least that's the case with every insurance company I've ever been insured with.
Edited by kambites on Friday 30th April 20:55
kambites said:
Noger said:
To answer the question, no your son does not need to be RK. To avoid fronting he needs to be the Policyholder and the Main Driver.
No he doesn't. He needs to be the main driver. It makes no difference who the policy holder is. At least that's the case with every insurance company I've ever been insured with.
Edited by kambites on Friday 30th April 20:55
Mum as PH and son as Main Driver (so as to get a discount as mum is a less risk) is just as much fronting as Mum as main driver and son as additional but drives all the time. All depends on if you are trying to get a cheaper premium. When husband is PH and wife is Main Driver it doesn't make much difference, so if less of a bother. Depends on circumstances. And what you are rating on. Rate on highest risk driver, and probably won't matter.
Although to be fair, they are probably getting less of a discount that way round, as to misleading main driver fronting.
More of a middle class front this one
Edited by Noger on Friday 30th April 21:03
Noger said:
R1 Loon said:
saaby93 said:
It should be in the name of the main keeper - someone else can own it
Eh? So the Insurable Interest Act doesn't apply anymore?But no, the chances are it doesn't.
GIM1050 - Legal basis of insurance: insurable interest
Another characteristic of a contract of insurance is the existence of an insurable interest.
This is not a general rule of law but is in fact a statutory requirement, imposed by the ‘Life Insurance Act’ 1774 (which is not confined to life insurance) and the ‘Marine Insurance Acts’ of 1746 and 1778, codified in the Marine Insurance Act 1906 (not in fact confined to marine insurance).
The 1906 Act defines insurable interest as where a person stands “in any legal or equitablerelation to the adventure or to any insurable property at risk therein, in consequence of whichhe may benefit by the safety or due arrival of insurable property, or may be prejudiced by itsloss, or damage thereto, or by the detention thereof, or may incur liability in respect thereof”. In other words, a person who may suffer financial loss from an event has an insurable interest in the property or interest which is insured against that event. The event must create upon the insured a commercial loss or liability, or it must affect a right of the insured which is recognised and protected by the courts.
A person will therefore have an insurable interest in property in its possession but cannot have an insurable interest in its debtor’s property unless a lien or similar right attaches to it. Neither can a person have an insurable interest against an event if it does not seek directly to protect the right to which it is legally entitled. Thus a parent company has an insurable interest in the shares of its subsidiary but not in the underlying assets or profits of that company.
A contract without insurable interest is null and void for all purposes, though in practice void contracts are often performed as if they had full legal effect.
The requirement for an insurable interest is a feature of English and Scottish law that is not present in all territories; even common law ones such as the Isle of Man. Its application to modern commercial law has been questioned, and it is under review ( GIM1010). One effect of the need for an insurable interest is to hinder the establishment of a secondary market in insurance or reinsurance risks. Arbitrage possibilities are strictly limited and there can be no effective forward trading of insurance risks in the capital markets. This is one factor behind the existence of a pronounced insurance (or underwriting) cycle, see GIM1240. The absence of derivative instruments also makes the cycle hard to manage.
Edited by R1 Loon on Saturday 1st May 00:49
Noger said:
Common misconception as to fronting. I have already posted at length about the subject in SP&L so won't do it again.
Obviously very common, because I've explicitly asked my last three insurance companies this very question and they all say it's perfectly legal. I think I'll believe the company writing the contract over some random person on the internet I'm afraid. If three of the biggest insurance companies in the country are selling illegal contracts, wouldn't someone have noticed? If it wasn't legal that would be saying that the policy holder is always the main driver so why would you be able to specify a different main driver than the policy holder?
Edited by kambites on Saturday 1st May 09:06
Sorry, my fault for not being explicit.
The PH does not generally have to be the RK.
But in the case of a young driver, if the policy is fronted by an older driver as PH to get a cheaper premium, then you may have bother.
This is seperate to any misrepresentation of the main driver.
So dad buys car, is RK, gets a policy in his name with son as Main driver. He knows about "fronting" so doesn't try to fib about him being main driver.
That is still a fronted risk. Many insurers will insist that the son is PH so as to price properly.
So either change son to RK and PH. Or make sure son is PH if required. Or find an insurer who doesn't rate on the Policyholder.
The PH does not generally have to be the RK.
But in the case of a young driver, if the policy is fronted by an older driver as PH to get a cheaper premium, then you may have bother.
This is seperate to any misrepresentation of the main driver.
So dad buys car, is RK, gets a policy in his name with son as Main driver. He knows about "fronting" so doesn't try to fib about him being main driver.
That is still a fronted risk. Many insurers will insist that the son is PH so as to price properly.
So either change son to RK and PH. Or make sure son is PH if required. Or find an insurer who doesn't rate on the Policyholder.
Edited by Noger on Saturday 1st May 13:13
Noger said:
Sorry, my fault for not being explicit.
The PH does not generally have to be the RK.
But in the case of a young driver, if the policy is fronted by an older driver as PH to get a cheaper premium, then you may have bother.
This is seperate to any misrepresentation of the main driver.
So dad buys car, is RK, gets a policy in his name with son as Main driver. He knows about "fronting" so doesn't try to fib about him being main driver.
That is still a fronted risk. Many insurers will insist that the son is RK so as to price properly.
So either change son to RK and PH. Or make sure son is PH.
Taking the issue over the PH vs RK statement out, I completely agree with that.The PH does not generally have to be the RK.
But in the case of a young driver, if the policy is fronted by an older driver as PH to get a cheaper premium, then you may have bother.
This is seperate to any misrepresentation of the main driver.
So dad buys car, is RK, gets a policy in his name with son as Main driver. He knows about "fronting" so doesn't try to fib about him being main driver.
That is still a fronted risk. Many insurers will insist that the son is RK so as to price properly.
So either change son to RK and PH. Or make sure son is PH.
For those who are quoting the big insurace companies, I'd always be slightly worried about what a Call Centre operator will tell you is OK.
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