‘Ghost brokering’ fake insurance policies is on the rise in the UK, becoming one of the latest fraud scams in a long line of car insurance rip-offs.

According to anti-scam website Action Fraud, around 20,000 British motorists have already fallen foul of this new form of car insurance crime – so what is ghost brokering and how can you avoid it?

Ghost insurance brokers target drivers looking for cheap car insurance – these criminals will often act as insurance intermediaries offering to get you the best deal on your car cover.

Cash-strapped young motorists are generally the target market, with ghost brokers often using social media posts to advertise their services.

Once contact has been made with the fake company and the unknowing punter has handed over their details, the ghost broker will haggle with an insurance company and get a cheap quote.

This is usually way under market rate and too good to be true, because the middlemen have changed the proposer’s details to reduce their premium.

Following the customer’s acceptance and the payment for the policy, these fake insurance brokers will then send out the policy documents.

But even though the motorist may have paid for their insurance, they could be left without cover in the event of a crash.

If involved in an accident, the false details given over by the ghost brokers could mean some drivers are unknowingly committing insurance fraud and will therefore not be covered for any damage, as well as unlawfully driving on the public road.

The Association of British Insurers (ABI) believes the ghost broker issue is escalating, too, as spokesperson Malcolm Tarling outlines:

“We have for some time been investigating the growth in these illegal insurance advisers who basically purport to arrange motor insurance but take the money off innocent motorists and pocket it.

“The result is the motorist thinks they are covered but are in fact driving without insurance and hence illegally.”

The ABI’s advice to motorists worried about ghost brokering is to steer clear of any company that approaches you offering a quote for car insurance. If an advert or quote seems worryingly cheap, it’s usually a sign of a scam.

The organisation also recommends that drivers avoid buying car insurance in such ways as outlined above.

If you are unsure as to the authenticity of a company claiming to be a car insurer or a car insurance broker, contact the Financial Services Authority – if the organisation is not registered and therefore regulated by the FSA, walk away.

Finally, once you’ve taken out your motor cover, you should receive your policy documents, including a schedule of motor insurance, the policy document itself and a certificate of cover.

Make sure you check all the details here are correct – even if it’s a genuine mistake, it could mean you’re driving illegally and won’t be covered. Which means you could also pick up six points on your licence and a £300 fine.