N.C. House to Halt Out-of-State Auto Insureds Seeking ‘Rate Evasion’

May 23, 2007

Out-of-state residents who obtain automobile insurance in North Carolina fraudulently to get cheaper premiums would be guilty of a felony in a bill that the House approved unanimously this week.

The state Insurance Department sought the bill after accusations that people from high-premium states jig the system by supplying bogus North Carolina information.

Thousands of people living elsewhere benefit from so-called “rate evasion” because North Carolina has one of the lowest premium rates in the country, said Rep. Bruce Goforth, D-Buncombe, one of the bill’s primary sponsors. When those people get into accidents in high-cost urban areas, they raise premiums for North Carolina residents, he said.

“Folks from the north are taking advantage of it,” Goforth said.

The bill, approved 112-0 and heading to the Senate, would make it a low-grade felony for someone to intentionally deceive an insurer and requires insurers to take reasonable steps to see if an applicant is providing true information.

Out-of-state motorists who seek the lower rates often come to North Carolina to register their car and get a driver’s license, according to the Insurance Department.

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