Amd SS401, 405 & 2133, Ins L; amd SS170.10, 170.15, 176.05 & 176.15, add S175.50, Pen L; add S201-a, amd
SS401 & 502, rpld & add S502 sub 1, V & T L
Grants the superintendent of financial services authority to investigate fraudulent activities, such as motor vehicle operators who drive with no insurance coverage, and those who misrepresent their principal place of residence or where their motor vehicle is principally garaged and operated; authorizes such superintendent to accept reports of suspected fraudulent insurance actions; requires insurance companies and self-insurers to report incidents of insurance fraud to the department of financial services; includes within the class D felony of forgery in the second degree, the forgery of a certificate of insurance or an insurance identification card; includes within the class C felony of forgery in the first degree, the forgery of 10 or more written instruments; includes within the class E felony of insurance fraud in the fourth degree, the operation of a motor vehicle in this state when the vehicle is insured in another state, but it is actually garaged in this state or the owner principally resides in this state; requires applicants for motor vehicle registrations and driver's licenses to provide the department of motor vehicles with the address of their principal place of residence.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3747
SPONSOR: Gibson TITLE OF BILL: An act to amend the insurance law, the penal law, and
the vehicle and traffic law, in relation to insurance fraud; and to
repeal subdivision 1 of section 502 of the vehicle and traffic law
relating to applications for licenses
PURPOSE: The purpose of this bill is reduce the incidence of auto
insurance fraud including fraud committed by those who misrepresent
where they live, operate their automobile, and garage such vehicle for
insurance coverage purposes. By misrepresenting where such automobile
operators truly live and operate their motor vehicle, these persons
obtain inappropriate reductions in their auto insurance premium rates
and such costs are shifted to other law abiding automobile owners.
SUMMARY OF PROVISIONS:
Section 1: Adds a new Insurance Law section 401(d) to explicitly expand
the authority of the Superintendent of Financial Services, under the
Insurance Fraud prevention Article, to investigate fraudulent activities
with regard to motor vehicle operators who have not secured automobile
insurance coverage or who misrepresent the principle place where such
automobiles are garaged and operated.
Section 2: Amends Insurance Law section 405(a) to authorize the Insur-
ance Frauds Bureau to accept reports of suspected fraudulent insurance
transactions from any self insurer with regard to health insurance
coverage, motor vehicle liability coverage, or workers compensation
coverage.
Section 3: Amends Insurance Law section 2133 to expand the scope of
prohibition for any insurance company, insurance agent, broker, or other
person who knowingly possesses, transfers or uses a forged insurance
identification card to also include other false insurance documents
which purports to evince insurance coverage when it is not in effect or
is at limits less than those stated on the document.
Section 4: Amends Penal Law section 170.10 to add a new (6) to the list
of documents that the forgery of is considered to be forgery in the
Second Degree. The new document that, if forged, would be forgery in the
Second Degree are certificates of insurance or an insurance identifica-
tion card.
Section 5: Amends Penal Law section 170.15 (Forgery in the First Degree)
to include as forgery in the first degree, the fraudulent making,
completion, or alteration of 10 or more written instruments such as
certificates of insurance or insurance identification cards.
Section 6: Adds a new Penal Law section 175.50 to make it a class E
felony to offer a false application for motor vehicle insurance or
registration. Under this provision, anyone who submits to the Department
of Motor vehicles or to an auto insurer (to obtain an auto insurance
policy or insurance identification card) any document that contains a
false statement or information with regard to where such applicant
resides or where such applicant's motor vehicle is garaged or operated
and such document is used directly or indirectly to register an automo-
bile shall be a class E felony.
Section 7: Amends Penal Law section 176.05 which defines the term
"insurance fraud". Under this bill, the term "insurance fraud" is
expanded to include any false document used to secure either insurance
coverage, file an insurance policy claim, or obtain payment for personal
lines insurance coverages (i.e. auto and homeowners insurance). Under
current law, only false documents that are used to secure commercial
lines policies or money for claims against a commercial lines policy
(i.e general liability or business property policies) are considered to
be insurance fraud. This bill expands the types of insurance policies
that persons cannot lie about to obtain coverage or claims payment to
include personal lines coverages such as motor vehicle liability or
homeowners insurance.
Section 8: Amends Penal Law section 176.15 to expand the scope of insur-
ance fraud in the 4th degree to include the operation of a motor vehicle
on a public highway when such operator is insured by a policy issued
under the laws of another state, but such person in fact principally
lives and garages their vehicle in New York.
Section 9: A new Vehicle & Traffic Law section 201-a is added to give
law enforcement personnel access to any individual's street address
provided to the Department of Motor Vehicles to register a motor vehicle
in this state or to obtain a driver's license in this State. This infor-
mation can be used to ensure that those who submit information to the
Department submit accurate information of their residence and where they
operate and garage their motor vehicle for auto insurance premium rating
purposes.
Section 10: Amends Vehicle & Traffic Law section 401(1) to require that
all those who file an application to register an automobile in New York
must provide their street address where they reside if such person uses
a Post Office box for their location of residence. The purpose of this
provision is to curtail those that submit fraudulent information on
where such applicants truly reside.
Section 11: Amends Vehicle & Traffic Law section 502(1) to require that
all those who file an application for a driver's license must provide
their street address where they reside if such person uses a Post Office
box for their location of residence.
Section 12 and 13: Amends Vehicle & Traffic law section 502 to make
technical conforming changes to this section based on inconsistent
provisions added by Chapters 465 and 487 of the Laws of 2012.
JUSTIFICATION: The purpose of this bill is to address the ever
increasing incidence of auto insurance fraud in this state. More partic-
ularly, this bill seeks to address insurance fraud that is perpetrated
against those law abiding operators of motor vehicles that accurately
and truthfully disclose where they reside and operate and garage their
vehicles, regardless of where they live. Some who live in high auto
insurance rate areas, such as the New York City metropolitan area,
misrepresent where they live, garage and operate their automobiles and
fraudulently maintain that they live in low insurance premium rate areas
that are either upstate or out of state.
There is a prevalence of in-state residents misrepresenting their true
place of residence so that they can obtain much lower auto insurance
rates. Instead of disclosing their true address in high insurance premi-
um places such as, for example, Bronx or Kings Counties, they state that
they live in lower insurance premium rated territories such as North
Carolina, Pennsylvania, or upstate counties that have much lower inci-
dents of motor vehicle theft, car accidents or judgments relegated to
motor vehicle accidents. This issue was a topic of a report released in
2006 by the State Commission on Investigations. Since 2006, the commis-
sion has sunsetted, however, senator Klein is revising end updating this
report. The new Report "Auto Insurance Rate Evasion" was released in
February 2011. This bill implements many of the suggested changes
contained in that Report.
This situation or rate evasion, while artificially lowering the insur-
ance rates of those who fraudulently do not disclose their true residen-
tial address, substantially increases the insurance premiums paid by
those who truthfully disclose their actual place of residence and where
they operated and garaged their cars. This hill should bring more equity
to those who purchase auto insurance coverages in this state and ensure
that everyone pays their fair share for auto insurance coverages that
matches their actuarial risk of potential physical damage or theft of
their automobiles, risk of personal injury or liability exposure due to
judgments obtain in local courts.
LEGISLATIVE HISTORY: 2011-2012 - S. 4847 - Passed Senate in 2011, and
reported to Sen. Calendar in 2012 Similar to S.988 of 2011 - Similar to
S.7091 of 2010 - Referred to Insurance
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: 180 days after it shall have become law.
