Authorizes the department of motor vehicles to study registration compliance and establishes penalties for automobile insurance rate evasion

2 Co-sponsors

• Tony Avella
• William J. Larkin Jr.

BILL NUMBER:S4074 REVISED 3/13/15

Title of bill

An act to authorize the commissioner of motor vehicles to study registration compliance and to amend the financial services law, in relation to the establishment of penalties for automobile insur- ance rate evasion

Purpose

The bill would direct the New York Department of Motor Vehicles to study the problem of New York state residents failing to properly register their vehicles in New York and provide recommendations for solutions to this problem.

Summary of provisions

Section 1. Direct the Department of Motor Vehicles to study the problem of New York residents improperly registering their vehicles out of the state.

Section 2. Direct the Department of Motor Vehicles to issue a report of findings and provide recommendations to encourage compliance with the law.

Section 3. Financial Services Law section 408 (a) (1) (A) is amended to stipulate that the Superintendent of the Department of Financial Services may impose a fine of no more than $5,000 for any intentional fraud or intentional misrepresentation of a material fact on an insur- ance policy application.

Section 4. Effective date is immediately upon enactment.

Justification

The New York State Commission of Investigation (SCI) in 2006 published a preliminary report of their investigation into insur- ance rate evasion through the use of out of New York State license plates. SCI found that in 2005 295,963 parking summonses were issued in New York City to 127,243 Pennsylvania registered vehicles. As of Febru- ary 2006, 152,957 of these summonses were still outstanding and these represent unpaid fines due to New York City of $14.3 million. New York City is also missing out on unpaid red light traffic infraction fines due to out of state registrations. In 2005 7,378 notices were sent to owners of vehicles registered in Pennsylvania with 3,143 remaining unpaid as of March 2006. The unpaid fines for these notices add up to $270,350.

Additional evidence of the large number of New Yorkers improperly regis- tering their vehicles out of state is found from the SCI report's reci- tation of 2004 data with 4,495 accidents involving Pennsylvania-regis- tered vehicles reported to DMV with 1,098 of these accidents (about a quarter) occurring in Brooklyn. Since Brooklyn is not contiguous with Pennsylvania, this strongly suggests that most of the owners of these vehicles were likely New York residents and not Pennsylvania residents.

Extrapolating the 1,098 Brooklyn out of state registered vehicles to New York City as a whole and calculating the average sales tax amount for these vehicles leads to a conservative estimate that the State is losing out on at least $2.7 million in sales tax revenue it should rightfully receive with New York City losing out on the equivalent sum.

Furthermore, given the costs of a New York registration is $80 for an average 2 year registration fee, $25 license plate fee, $50 original title certificate fee and a $30 2-year vehicle use tax for New York City residents only, these 1,098 accidents meant a loss to State and City coffers of at least $203,130, consisting of a $35,940 loss to the City and a loss of revenue to the State of $167,190. While that number may seem minor, extrapolating it over all five New York City boroughs adds up to a State and City revenue loss of over $1 million.

Legislative history

New bill.

Fiscal implications

New York City could recovery upwards of $17.2 million. The State could recoup at least $3.8 million.

Effective date

This act shall take effect immediately after it shall have become a law.