Fraudulent motor insurance claims have soared by more than 70 per cent in the past four years, making the car the No 1 insurance fraud target. The Association of British Insurers will announce today that fraudsters are submitting dishonest motor claims of £5 million a week.

Insurance companies and fraud experts say that the credit crunch has forced families struggling to meet their hire purchase payments to take desperate measures.

Gabrielle Stewart, technical director at Absolute, a firm that detects fraud on behalf of major insurers, said: “There will always be greed, there will always be people who want something for nothing. At the moment, however, people have genuine financial problems. Low-income families and those with poor credit records are stuck with mortgages which they can no longer move on to cheaper rates, they are living beyond their means and they cannot take out personal loans. Some are going to extreme lengths, such as making fraudulent motor claims, when they fall behind on their hire purchase payments.”

Four years ago, insurance companies identified 14,000 people who had made false motor insurance claims. Last year the number was 24,000.

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One man who claimed his car had been stolen admitted that he had pushed it over a cliff after it was pointed out that a local newspaper had carried a picture of his wrecked car three days before the alleged theft. He said he needed the insurance money to pay HP debts.

Motor insurance scams add about £40 a year to the premiums of law-abiding drivers.

As for insurance fraud as a whole, which includes motor, household, travel and liability cover, insurance firms uncovered a total of 91,000 fraudulent claims last year, amounting to £557 million. Four years ago the figure was £263 million.

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