Car insurance is one of the essentials for anyone wishing to drive. It is a legal requirement to have insurance on any car that you may wish to drive, and if you are caught without the penalties can be severe. Generally speaking, car insurance is one of those types of insurance that people try to cut corners on, meaning that in reality many policies are a waste of money as they won't cover what people are hoping that they will.

According to latest figures, insurers uncovered somewhere in the region of £5m a week of fraudulent motor insurance claims. The Association of British Insurers (ABI) says that 24,000 claims worth a total of £260m were found to be dishonest last year.

It is important to point out that not all of those claims were intentionally dishonest. Though it is a legal requirement to have insurance, as it can be very expensive - particularly for certain demographics - people sometimes try to find shortcuts in order to get cheaper policies. The insurance industry, however, gather a lot of information when it comes down to offering insurance policies, and if their information is found to be inconsistent with the evidence when it comes down to making a claim, they will often refuse to pay.

Some people, however, were intentionally dishonest and spectacularly so. One driver, for example, deliberately pushed his vehicle off a cliff and then said that it had been stolen in order to redeem the value of his insurance policy.

Fraudulent claims, the ABI says, have led to motorists having to pay around £40 extra on their policies as the insurance companies look to cover themselves for the dangers posed by fraudulent claims. This is in addition to the roughly £35 that motorists pay in insurance, just to cover for those who drive on the roads without insurance altogether. More worryingly these figures look set to rise as the credit crunch bites and people find themselves with less and less money. Over the past three years alone, dishonest motor claims have risen by as much as 70%.

The ABI has been keen to point out that insurance fraud is not a victimless crime, nor is it large insurance companies who ultimately end up paying for it most. As the companies can charge any premium they like - providing it is competitive - they have, across the board, been protecting themselves from such frauds. The ABI's director of general insurance and health pointed out that it is honest motorists who end up footing the bill.

Insurances companies are, unsurprisingly launching a crack down to in order to weed out the cheats, but suggestions will soon be made that the government should threaten harsher penalties in order to help the honest, law abiding motorist who is undeservingly paying extra. With the price of insurance policies set to go up over the next few years, it is more important than ever that when you are getting out a policy you take care to look at all the options and get the best policy that you can.

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