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Hire car fraud is costing motorists and insurers millions each year

An investigation conducted by the BBC has uncovered that criminal gangs are making millions each year in a new car insurance scam.

Mercedes Benz

The scam involves false claims for replacement cars that are given to drivers whilst their own vehicle is being repaired. Research conducted by DAC Beachcroft estimated that this type of fraud is estimated to cost insures and motorists an estimated £60 million a year. This results in a rise in insurance premiums.

Criminal gangs were setting up bogus claims management and hire companies in order to prosper in the growing market in providing replacement cars.

They use various methods to try and defraud insurance companies. In some cases they will charge insurers for a car they have not actually provided - known as a "phantom hire".Another method used will be to "hire" the same car to several different people at the same time, claiming separately for each non-existent hire.

In one case a hire car company said it had supplied a customer with a Maserati when in fact the driver had been given a VW Golf.In another, an E-class Mercedes was claimed for when the actual vehicle supplied was a Ford Fiesta - which was £200 a day cheaper to hire. The car was hired out for 55 days, netting fraudsters £11,000

The Association of British Insurers (ABI) says around £2bn in insurance fraud goes undetected each year, adding, on average, an extra £50 a year to the insurance bill paid by every UK policy holder.

For further information visit the BBC website.

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