Insurance fraud costs £800 million a yearFraudulent claims cost £2.3 million a day

31 December 2010

A glass of red wine

Insurers will put up your premiums if you make a claim

Fake insurance claims are costing the industry more than £800 million a year, with the costs of investigating and repairing fraudulent claims leading to a rise in the cost of legitimate premiums.

According to the Association of British Insurers (ABI), dodgy home insurance claims are the most common form of fraud, with 170 homeowners lodging false claims every day. Car insurance claims are less common.

£44 cost to legitimate customers

The ABI's director of general insurance and health Nick Starling said: 'Insurance cheats do not prosper – they can expect to get caught, face problems getting future insurance and risk getting a criminal record. 

'The majority of customers are honest and rightly object to subsidising the cheats. Insurance fraud adds an extra £44 to the average UK household’s annual insurance bill. This is why 2011 will see insurers intensify their war against the cheats, to protect their honest customers.' 

Among the most spurious claims investigated include a case of a policyholder claiming he'd slipped on loose paving and sustained head injuries. In fact, he had been involved in a fight and was attacked with a baseball bat. 

Another took part in a motor rally in Germany, in which his car was damaged. He shipped the car back home and claimed it had been damaged by an unknown motorist.

Visit the Which? online guides for more on car and home insurance.

pound coins

Which? Money when you need it

You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.

Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.

Or for money-saving tips, and news of how what's going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast

For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.