Requires a report relating to insurance fraud to include the incidence of misrepresentation by insureds of the principal place where vehicles are garaged and driven

Title of bill

An act to amend the penal law and the insurance law, in relation to motor vehicle insurance fraud

Purpose

To make certain that the incidence of misrepresentation by insureds as to where the principal place of motor vehicles are garaged and driven will be considered as a fraudulent insurance act.

Summary of provisions

Section 1 of the bill amends subdivision 1 of section 176.05 of the Penal Law, as amended by chapter 635 of the laws of 1996 and designated by Chapter 2 of the Laws of 1998, is amended to provide that the rating of a policy insuring against the losses or liabilities arising out of the ownership, operation or use of a motor vehicle, will be considered to be committing a fraudulent insurance act.

Section 2 of the bill amends paragraph 11 of Subsection (d) of Section 405 of the insurance law, is amended to add that the incidence of misrepresentation by insureds of the principal place where motor vehicles are garaged and driven is subject to assessment of law enforcement and insurance companies.

Existing law

Existing law does not provide that the misrepresentation by insureds in relation to the place where motor vehicles are garaged and driven, to be a fraudulent insurance act.

Justification

Within the metro areas of New York State automobile insurance is appropriately higher in relation to the more rural areas of New York. The reasons for higher rates of automobile insurance in Metro areas include higher incidences as accidents, theft and damage. The practice of misrepresenting the place where an automobile is garaged or driven is a dishonest way of reducing the costs paid for insurance. Residents of areas where insurance costs are higher should not be permitted to pay lower rates for automobile insurance based simply on documentation that says their motor vehicle is garaged in an area where insurance costs are lower. This act of insurance fraud is causing an imbalance in the insurance pool of some regions in less populated areas of New York State, causing rates for less populated regions to be artificially inflated. This legislation would seek to end this imbalance and to assure that residents of metro areas pay insurance based on where they reside.

Legislative history

2007-2008: S.474 - Senate Codes Committee 2005-06: S.616 - DIED IN CODES 2003-04: S.692 - DIED IN SENATE INSURANCE COMMITTEE 1999-2000: S.2519 - DIED IN SENATE INSURANCE COMMITTEE

Fiscal implications

None.

Effective date

This act shall take effect on the one hundred twentieth day after it shall have become law.