What's happening
This bill expands insurance fraud in the fourth degree to include falsely claiming residence or vehicle garaging in another state.
Why it matters
Targets common methods of lowering insurance costs. by making it a felony to lie about where you live or where your car is primarily kept, addressing a widespread tactic used to pay lower premiums.
Seeks to protect New York’s insurance risk pool. by discouraging residents from misrepresenting their status to obtain cheaper out-of-state policies, which can shift costs unfairly onto honest policyholders.
Includes important exceptions for legitimate out-of-state insurance. such as students or those with a second residence—provided they are truthful with insurers, aiming to avoid penalizing people with genuine ties to another state.
Raises the stakes for insurance misrepresentation. by making these acts a class E felony, which can result in criminal prosecution and significant penalties, serving as a deterrent and signaling the seriousness of insurance fraud.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
New York drivers with out-of-state insurance
The bill would make fraudulent claims of out-of-state principal residence or vehicle garaging fourth-degree insurance fraud, a class E felony, without requiring more than $1,000 in property to be at issue.
Drivers with second homes or attending school out of state
The bill would exempt lawful out-of-state vehicle coverage tied to a second residence or school attendance if drivers also drive and garage the vehicle there and truthfully disclose their principal residence and garaging state.
Auto insurers and insurance producers
The bill would target fraudulent residence and garaging information and make truthful disclosure to insurers or producers a condition of the exemption.
Prosecutors
The bill would add a basis for fourth-degree insurance fraud charges involving false out-of-state residence or garaging information.
Headline styles
Crack Down on Insurance Fraud
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Committed to rules
- Advanced to third reading
- 2nd report cal.
- 1st report cal.1288
- Referred to codes
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Toughen Insurance Fraud Rules
In Assembly Committee · Codes · Sponsor Joseph Morelle
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
8363
IN SENATE
May 3, 2018
Introduced by Sen. GOLDEN -- read twice and ordered printed, and when printed to be committed to the Committee on Codes
AN ACT to amend the penal law, in relation to insurance fraud
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 176.15 of the penal law, as amended by chapter 515 of the laws of 1986, is amended to read as follows: § 176.15 Insurance fraud in the fourth degree.
A person is guilty of insurance fraud in the fourth degree when:
1. he or she commits a fraudulent insurance act and thereby wrongfully takes, obtains or withholds, or attempts to wrongfully take, obtain or withhold property with a value in excess of one thousand dollars; or
2. he or she commits a fraudulent insurance act and the material fact contained or concealed is that such person either (a) maintains a principal residence in the other state when, in fact, that person's principal residence is in this state; or (b) has his or her motor vehicle principally garaged in the other state, when, in fact, that person has his or her motor vehicle principally garaged in this state. This section shall not apply to a person who insures a vehicle in another state, as 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, where such person also drives and garages a vehicle in that state, if in obtaining the policy the person truthfully discloses to the insurance company or producer the state of the person's principal residence and the state where the vehicle is principally garaged.
Insurance fraud in the fourth degree is a class E felony.
§ 2. This act shall take effect on the first of November next succeeding the date on which it shall have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00929-01-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the penal law, in relation to insurance fraud
Purpose
More and more reports are occurring of New York residents, especially those living in New York City, registering their vehicles out of the state and also applying for auto insurance policies claiming the vehicle will be principally garaged and driven in the other state when they actually use the vehicle primarily in New York State. As a result, the State and local governments are missing out on millions of dollars in revenue for registration fees, license plate fees, title fees and a vehicle use tax in the case of New York City residents. In addition, it corrupts auto insurance rates because claims are not properly assigned to the correct rating territory. This bill would impose a penalty for the crime of intentional rate evasion, thereby deterring New Yorkers who may consider committing rate evasion from doing so and in the process saving law-abiding New Yorkers from the costs incurred by rate evasion.
Summary of specific provisions
Section 1. Amends section 176.15 of the Penal Law to provide that insur- ing a vehicle in a state other than New York when the vehicle is princi- pally used and garaged in New York constitutes insurance fraud in the fourth degree. Provides exceptions for persons who insure a motor vehi- cle in another state where they have a second residence and for college students.
Read the full memo (635 words)
Section 2. The bill would take effect on the first day of November next succeeding the date on which it becomes a law.
Jurisdiction
The New York State Commission of Investigation (SCI) in 2006 published a preliminary report of their investigation into insurance 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 February 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 miss- ing 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 recitation of 2004 data with 4,495 accidents involving Pennsylvania-re- gistered 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.
Furthermore, the New York Department of Financial Services' Financial Frauds & Consumer Protection Unit (FFCPU) 2012 Annual Report showed that the total amount of reported premium lost in 2012 due to rate evasion by New Yorkers improperly insuring their vehicles out of state was over $3 million. In total numbers, the FFCPU determined that in 2012 3,961 improperly insured vehicles were for out of state insured vehicles.
This measure is modeled on New Jersey's recent rate evasion legislation, which passed both houses of their legislature unanimously and is await- ing the Governor's approval. New York should join its nearby sister state and crack down on this unlawful practice that costs law-abiding New York auto insurance consumers.
Legislative history
S. 4900-A of 2015/2016, passed Senate.
Fiscal implications
For New York City, recovery of $17.2 million. The State could recoup at least $3.8 million.
Effective date
This act shall take effect on the first day of November next succeeding the date on which it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.