RSS for Comments

RSS for Entries

Twenty Four People Arrested for Insurance Fraud

Twenty four people, majority of which are New York City residents, with the rest coming from the state of New Jersey have been caught making false claims that they are from certain areas of Pennsylvania in order to get cheaper insurance premiums.  They are now facing criminal charges for falsification of identity and other related cases.

This practice is known as rate evasion wherein non-Pennsylvania residents would make false claims that they are from the state so that they could get a driver’s license or vehicle registration from the Pennsylvania Department of Transportation. They would then use this information to acquire cheap auto insurance which abounds in the state.

Pennsylvania has comparatively lower auto insurance fees compared to many states such as New York or New Jersey with many policies substantially cheaper compared to auto coverage in other major cities.  This has made the practice of rate evasion so tempting to many out-of-state motorists who want to save thousands of dollars on their auto insurance premiums.  In the end however, the actual losers are honest Pennsylvanian drivers who have to pay higher premium fees to cover for claims of drivers who lie that they are New York City residents.

Claims of fake residents on insurance policies cost the Pennsylvanian insurance industry anywhere from $12 to $15 million each year, which unfortunately are passed on to legitimate residents.  A typical modus operandi of rate evaders would be to get the lowest insurance premium by getting the minimum required coverage policy in Pennsylvania.  When they get involved in a car accident, insurance rules of their home state would apply, which would entail higher claims.

New York City ranks ninth in the whole country for staged car collisions, which is also one of the reasons why total insurance claims in the city are among the highest in the nation.  Many New York City residents are also agreeable to the issue of increasing accident claims to make up for the high insurance premiums drivers have to pay, according to a survey commissioned by the National Insurance Crime Bureau.

The twenty-four arrested are each charged with one count of insurance fraud (for giving false information to a government agency), which is punishable by a seven year jail sentence plus a $15,000 fine; one count of insurance fraud (for providing false information to insurance companies) and one count of false representation used for the application of a certificate title or registration, both of which are punishable by up to five years in jail on top of a $10,000 fine.

Similar Posts:

Share
This entry was posted on Wednesday, January 13th, 2010 and is filed under Auto Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply