New Jersey drivers who lie about where they garage and drive their vehicles to illicitly lower their auto premiums are a big step closer to facing stiff new penalties for being caught, according to the Coalition Against Insurance Fraud.
A bill making it a crime of insurance fraud to falsely register vehicles in other states cleared the legislature yesterday and heads to the governor for his potential signature.
“Turning premium dodging into an insurance crime would add enforcement teeth to New Jersey’s efforts to clamp down on rate evasion. The stronger likelihood of a criminal conviction also could help deter others from making the mistake of defrauding their auto insurer,” said Howard Goldblatt, the Coalition’s director of government affairs.
The Coalition is urging governor Chris Christie to sign and enact the bill into law.
Dodging auto premiums is a growing problem in the state. New Jersey drivers in the state have the highest auto premiums in the U.S., $1,219 annually. Varied auto-insurance scams and heavy congestion are two causal factors.
Some New Jersey drivers try to avoid steep premiums by lying to their auto insurer that they garage and drive their vehicle in locales with lower premiums. Premium evaders often use North Carolina and neighboring Pennsylvania as destination states. And New York premium evaders have been caught illicitly registering their vehicles in Iowa and Pennsylvania.
Honest policyholders in New Jersey end up subsidizing the auto premiums of drivers who cheat.
The Coalition helped draft the bill, testified before a key legislative committee to support the measure, and launched a grassroots letter-writing campaign in concert with the International Association of SIUs. Fraud fighters are now urging the governor to sign the bill.
Convicted drivers would face as much as 10 years in state prison and fines of up to $150,000.
“New Jersey has no law specifically penalizing so-called rate evasion. Bringing the crime under the state’s insurance-fraud umbrella would help prosecutions become more effective. Elements of the crime are clearly spelled out and thus are more-provable to the court,” Goldblatt added.
Criminal penalties and ease of proving an insurance scam also could encourage more prosecutors to take on rate-evasion cases.
“Point-of-sale fraud is a concern in New Jersey and other states. It is not unusual to drive through congested areas and see vehicles with out-of-state license plates on the road, parked by homes and in driveways,” Goldblatt testified before the state’s Senate Commerce Committee in February.
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