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New York Senate Passes Bill To Curb Auto Insurance Fraud

on April 11 | in Business, Finance | by | with No Comments

It’s no secret that auto insurance is a hot-button topic. Most drivers aren’t exactly big fans of paying for insurance they hope to never have to use, but to ensure that those who are affected by car accidents are compensated for property damage and for their physical injuries, it is in society’s best interest to have drivers be well-insured. Thus, whether people are on the side of the debate suggesting that auto insurance is a necessity or the side believing it is a necessary evil, one thing is consistent – auto insurance is needed for everyone’s well being. 

Recognizing these facts, individuals, organizations and lawmakers are taking steps to make auto insurance a less painful experience for everyone. Recently, the New York Senate passed a bill that may help keep auto insurance prices low by cutting down on fraudulent uses of insurance policies.

Bill Sails Through State Senate


As the official website for the New York State Senate explains, the legislature recently passed a bill known as S1959A, which was introduced by Brooklyn-based Senator Martin J. Golden in an attempt to crack down on auto insurance fraud throughout the state. Senator Golden was optimistic that the legislation would have a significant impact on the widespread problem of auto insurance fraud.

The new legislation would give insurance companies the power to retroactively cancel insurance policies taken out for the purpose of making fraudulent claims. The typical scenario targeted by the proposed law occurs where a criminal takes out a policy with a stolen credit card or bad check, and then stages an accident in order to file a fraudulent claim and pocket the money. Under current New York State law, insurance companies do not have the ability to cancel the policies covering these fraudulent accidents, and as a result, other drivers end up picking up the tab for the fraudulent claims in the form of higher premiums. 

No Guarantee of Passage in the Assembly

Now that the bill has passed the state Senate, it moves on to the Assembly. However, passage is not guaranteed; previous versions of the bill that passed the Senate did not make it out of the Assembly and onto the books as law. 

If New York passes the law, it would hardly be a trailblazer in the area, as only seven other states restrict insurance companies from cancelling policies involved in fraudulent accidents. By removing the incentive to create fraudulent accidents, drivers of new cars and those contemplating selling their old cars to a reputable website such as cashforclunkers.net in order to upgrade may be able to look forward to more consistent insurance premiums with lower rates and fewer rate increases.

It is perhaps no surprise that this legislation comes from a Brooklyn-based Senator, as it was home to the largest auto insurance fraud ring until a bust ended the activity in 2012. In that long-running scam, participants took advantage of New York’s no-fault accident laws, which prompted calls to reconsider the state’s auto insurance laws.

 

Image credit : freedigitalphotos.netnongpimmy

Source: http://www.nysenate.gov/press-release/senator-golden-continues-efforts-lower-auto-insurance-rates-cut-down-fraud

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