Adult 'kids' insured on parents' car insurance

02/11/2009

Many parents are continuing to pay their children's car insurance even when they reach adulthood, a new study has revealed.

Research from price comparison website uSwitch.com showed that the average age of a person named as a second driver on a parent's car insurance policy is 31 years old.

Many children can no longer afford to run a vehicle on their own due to rising costs surrounding insurance, petrol and other maintenance, the site explained.

However, the financial expert stated that the number of instances of fronting - the practice of a young person buying and registering a vehicle in their name but falsely telling an insurer a parent is the main driver - has increased since the onset of the recession.

Mark Monteiro, insurance expert at uSwitch.com, said: "Not only are hard-up 'kidults' living at home for longer, but they are hanging around on their parents' insurance policies for longer too.

"It is no secret that younger drivers pay far higher premiums than older motorists because of the higher risk involved - but many are now getting around it by becoming a named driver on their parents' policy instead."

Kevin Still, EuroDebt director, said: "It is interesting that the advent of the 'kidult' has highlighted potential financial problems at both ends of the scale. Older parents may be able to make meaningful savings on motor insurance premiums and other monthly expenditure if they stopped supporting grown up kids.

"Younger people are heavily penalized in terms of motor insurance premiums and reliant on parents to continually subsidise them. This sometimes creates a grey area in terms of what is determined as 'soft fraud'. There is a strong correlation between financial stress and fraud on motor, travel and household insurances, but the reality is that majority of people are trying to make ends meet.

He added: "EuroDebt will undertake a complete review of someone's financial circumstances when completing a financial planner at their face-to-face meeting, establishing the reasons why they fell into debt, how to optimize income and streamline monthly expenditure before looking at the level of unsecured debts and any arrears with priority creditors, like mortgage, rent, council tax and utilities. Insurance premiums are assessed as part of this process."

Research from the Association of British Insurers revealed that the number of cases of fronting has risen by 30 per cent since 2007.

Tags; Housing Debt and Bills,

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