(TRENTON) – Legislation Assembly Democrats Wayne P. DeAngelo, Joseph Lagana, Carmelo Garcia and Bob Andrzejczak sponsored to crackdown on insurance fraud has been signed into law.
The law (A-2281) targets residents who fraudulently obtain automobile insurance in another state, even though New Jersey is their principal residence or they principally keep the insured vehicle in New Jersey.
“Insurance fraud is not only wrong, but it costs honest drivers money through higher premiums,” said DeAngelo (D-Mercer/Middlesex). “We’ve made a lot of progress in controlling auto insurance rates, but we still have a long way to go and cracking down on fraud needs to be a big part of that continuing effort.”
DeAngelo said the Office of the Insurance Fraud Prosecutor had been unable to prosecute so-called reverse rate evasion cases because state law did not include it as a form of insurance fraud.
“The Office of the Insurance Fraud Prosecutor has documented a growing trend of New Jersey residents insuring in North Carolina and Pennsylvania to avoid higher insurance rates,” said Lagana (D-Bergen/Passaic). “The prosecutor has been suggesting this change in the law for more than four years, and we finally got this done for the benefit of all law-abiding New Jerseyans.”
Under the law, reverse rate evasion is considered a form of insurance fraud that violates the New Jersey Insurance Fraud Prevention Act. This law makes it a crime of the fourth degree.
The law also specifies that reverse rate evasion constitutes a violation of the New Jersey Insurance Fraud Prevention Act, with the various civil penalties and remedies provided for in that act applying to violations.
“All vehicles that should be registered and insured in New Jersey should be properly registered and insured,” said Garcia (D-Hudson). “Vehicle owners who misrepresent their residence are looking to reduce their own insurance premiums, but this instead results in a loss of revenue to the state, higher premiums for those who properly register their vehicles and reduced revenue for New Jersey insurers.”
“Auto insurance fraud means higher costs for everyone else,” said Andrzejczak (D-Atlantic/Cape May/Cumberland). “That’s why this law is common sense and fiscally responsible.”
