Dishonest drivers are ginning the auto-insurance system by illicitly registering their vehicles in states or counties with lower auto premiums. These cheaters may not drive or live there, but dishonestly setting up the address can save them a bundle on auto premiums.
This insurance scheme may cost honest consumers and the insurance system millions of dollars. And in some jurisdictions the drivers are committing insurance fraud.
Years ago the then-Philadelphia DA offered amnesty for dishonest drivers to step forward and properly register their vehicles in Philadelphia instead of their falsely claimed addresses in the Philly suburbs or southern New Jersey. A number of folks set their registration record straight — including an employee in the DA’s office.
More recently, North Carolina knew it had a problem with out-of-state drivers registering in the Tar Heel State. North Carolina now requires drivers to show proof of residence before they can register and insure their vehicle.
Several weeks ago the New Jersey Assembly passed a bill targeting drivers who lie about where they garage their vehicles. The state would gain more authority to go after these insurance cheaters if the bill becomes law.
New York has seen insurance investigators, consumer and community groups identify numerous suspicious vehicles parked in residential neighborhoods in Staten Island and Brooklyn. The vehicles oddly had license plates from Virginia, North Carolina, Pennsylvania and Iowa. Visiting friends or relatives don’t own these vehicles. They’re driven by New Yorkers who are cheating the insurance system.
An agent also may be helping New York drivers register vehicles in a state hundreds of miles away, confidential sources say. These drivers are cheating the system. They are raising the insurance risks and possibly auto premiums in the target state. They also are paying lower auto premiums without lowering the insurance risks in New York.
Neighborhood groups, anti-fraud groups and some legislators would like to make false vehicle registering a crime of insurance fraud in New York. A bill awaits action in Albany.
Most states have yet to make illegal registering a specific insurance crime. For the most part, we’ve also seen only sporadic enforcement. Still, more auto insurers and states are starting to realize that false vehicle registering can lead to other insurance crimes such as bogus vehicle injury or theft claims. Stopping rate evasion thus can help in the larger fraud fight.
States should step up and realize that rate evasion is an insurance fraud that needs targeting. It’s good for honest consumers and the insurance system.
About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.