N.Y. State Senate Passes Auto Insurance Fraud Measures

By | March 23, 2012

New York lawmakers want to slam the brakes on the auto insurance fraud. On Thursday, the state’s Senate passed three bills to fight auto insurance fraud.

These measures will now move to the state Assembly for consideration. According to the New York Senate, auto fraud schemes cost New Yorkers more than $1 billion a year.

Recent cases of auto insurance fraud have uncovered massive crime rings, including doctors, lawyers and scam artists who staged accidents and exploited New York’s no-fault auto insurance law. The lawmakers said these fraudsters used New York’s no-fault insurance program as “their own giant state-sponsored, ATM machine.”

Here are the summaries of the Senate bills:

S.4507B would enable insurance companies to retroactively cancel policies taken out by people who commit auto fraud. People that plan to commit auto fraud often take out auto insurance policies and pay for the initial premium with a bad check, an unauthorized bank account or stolen credit card.

Once the policy is obtained, scammers commit fraud through a staged accident or other means. Under current law, the insurer cannot cancel the coverage even if there is fraud. This bill would allow an insurance company to retroactively cancel an auto insurance policy in the first 60 days if the initial premium payment is not honored by a bank due to insufficient funds, non-existence of a bank account, or unauthorized use of a bank account.

This measure would bring New York in line with the other large no-fault states. In fact, only seven other states (Arizona, Colorado, Kansas, Maine, Maryland, North Carolina and South Dakota) do not allow for retroactive cancellation.

S.1685 would establish a new felony-level crime of staging a motor vehicle accident. A person who operates a car and intentionally causes a collision with intent to commit fraud would now face the charge of staging a motor vehicle accident. It would be a class D felony, punishable by up to seven years in prison.

S.2004 would make the use of “runners” illegal in New York. A “runner” is a person who receives money for obtaining clients or patients to participate in insurance fraud. Runners are commonly used in the New York City area to steer accident victims towards unnecessary medical treatments, according to a statement from the state Senate. Legislation would make it a class E felony, punishable by up to four years in prison, to act as a runner or hire another person to act as a runner.

Was this article valuable?

Here are more articles you may enjoy.