The New York State Senate has passed legislation designed to ramp up penalties for those who commit automobile insurance fraud.
The bill, SB 578, would make it a felony to forge an auto insurance card, certificate of insurance or other documents that are required to legally operate a motor vehicle. Forged insurance cards and documents are often used to fraudulently register cars so that owners may operate them without paying auto insurance premiums. The bill also makes it a felony to sell 10 or more false insurance cards or documents.
New York Sen. Jeffrey D. Klein, D-Bronx/Westchester, who introduced the bill, said in a statement that under current law, it is "law-abiding New Yorkers who ultimately have to pay the price of auto insurance fraud." Klein added, "With this common sense legislation, we will help punish those who seek to game the system, lower auto insurance premiums and make New York's roads safer."
A companion bill is currently working its way through the New York Assembly. It is currently before the Assembly's Codes Committee.
New York has been plagued by auto insurance fraud in recent years, particularly fraud stemming from no-fault claims.
A recent report from the Insurance Research Council found no-fault abuse adds more than $200 million each year to the auto premiums paid by New Yorkers.
On average, a no-fault claim in New York costs 64% more than the national average claim of $5,289, according to Fraud Costs NY, a coalition of insurance trade groups, consumers, small businesses and elected officials that are trying to reform the state's no-fault auto insurance system.
Some insurers in the state have been fighting back against fraud with lawsuits against alleged perpetrators.
In December, Allstate Insurance Co. filed seventh insurance fraud lawsuit of 2011, charging that 83 defendants in the New York area allegedly submitted fraudulent and misleading bills for payment.
Allstate is seeking to recover $6.3 million in damages in that case. Allstate Insurance Group has a current Best's Financial Strength Rating of A+ (Superior).