The Coalition surveyed state laws a couple of years ago to see how states deal with residents who falsely register and insure their vehicles in other states with lower auto premiums. Very few states consider this scheme an act of insurance fraud, we found.
North Carolina is an exception. Drivers must show proof of residence before they can buy auto insurance. North Carolina is trying to head off rate-evasion cons. Drivers in several states falsify North Carolina residence to obtain cheaper auto insurance than in their home states.
Rate evasion is a lose-lose for the victim state where the vehicles are garaged. Honest insurance consumers pay higher premiums to subsidize the smaller pool of drivers. Scofflaws also rob the state and local governments of registration fees or vehicle taxes.
Yet few prosecutors will go after dishonest drivers unless there’s a specific fraud law that makes convictions of violators more likely.
We may be seeing a surge of other frustrated states that have seen enough of dishonest drivers.
New Jersey is about to make life much harder for cheaters by strengthening its law targeting those who use out-of-state addresses to avoid higher New Jersey insurance. The governor signed the bill into law late last week.
The Coalition is joining with insurer partners to push the legislation into law. Fraud fighters shortly will start a grassroots letter-writing campaign to show legislators in Albany why they should vote “Yes” for passage.
We strongly encourage New York fraud fighters to write their legislators. Let’s push for a surge of legislation that turns this scam into a dead-end street for cheaters.
Yet more states could see bills clamping down on premium evaders. It seems there’s a growing feeling that enough is enough. Let’s turn avoiding auto premiums into a dead-end street.
About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.