New Jersey Bill Seeks to Crack Down on Reverse Rate Evasion

October 3, 2014

The New Jersey Assembly passed a measure that would make reverse rate evasion an insurance fraud and provide for civil and criminal penalties. The bill, A 2281, passed the state’s Assembly on Monday and is pending in the state Senate.

This bill includes reverse rate evasion as a form of insurance fraud that violates the “New Jersey Insurance Fraud Prevention Act,” P.L.1983, c.320 (C.17:33A-1 et seq.) and the criminal statutes that define the crime of insurance fraud.

Reverse rate evasion occurs when New Jersey residents fraudulently obtain automobile insurance in another state even though New Jersey is their principal residence or they principally garage the insured vehicle in New Jersey.

The bill includes reverse rate evasion as a crime of insurance fraud and makes it a crime of the fourth degree. The bill specifies that reverse rate evasion constitutes a violation of the New Jersey Insurance Fraud Prevention Act, and that the various civil penalties and remedies provided for in that act apply.

The bill’s reverse rate evasion provisions would not apply to a person who insures a vehicle in another state if permitted by and in accordance with the laws of that state, based on a second residence or attendance at an educational institution in that other state, if in obtaining that insurance policy the person truthfully discloses to the insurer or producer the state of the person’s principal residence and the state where the vehicle is principally garaged.

Topics Trends Fraud Pricing Trends New Jersey

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