Southern Brooklyn

Senate Passes Anti-Fraud Bill Allowing Auto Insurance Companies To Retroactively Cancel Policies

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Source: Nathan James/Flickr

Legislation aimed at reducing auto insurance fraud in New York State passed the Senate on Monday, bringing the bill which allows insurance companies to retroactively cancel the policies of fraudsters one step closer to law.

The Senate bill was sponsored by State Senator Marty Golden, who describes it in this press release:

Today the New York State Senate passed S1959A, sponsored by Senator Martin J. Golden (R-C-I, Brooklyn), which allows insurance companies to retroactively cancel policies taken out by people who commit auto fraud. These criminals often take out policies and pay for them with bad checks or stolen credit cards just before they stage accidents. Under current law, insurance companies cannot cancel the policy and policyholders wind up paying for it through higher premiums. This bill would take that burden off honest consumers and therefore lower the insurance rates.

“Auto insurance fraud is costing New Yorkers millions of dollars, and it’s time that fair and honest members of our community stop paying for the crimes of others,” stated Senator Golden. “This legislation will give insurance companies the right to revoke insurance policies for those who try to game the system.”

This measure would bring New York in line with the other large no-fault states and remove any incentives for staged accidents. In fact, only seven other states (AZ, CO, KS, ME, MD, NC and SD) do not allow for retroactive cancellation. Innocent victims of uninsured drivers would be covered under their own policy or the Motor Vehicle Accident Indemnification Corporation.

The bill, which you can read here, now moves onto the Democratic-led Assembly, where it has support from a number of Democrats, including local Assembly members Steven Cymbrowitz and Dov Hikind.

Previous versions of this bill – and two others passed by the Senate to combat auto fraud – died in the Assembly.

Auto fraud continues to be an ongoing issue in Southern Brooklyn. The longest-running and largest auto insurance scam ring in history ended in April 2012, when authorities busted 36 individuals – many of them Southern Brooklyn residents – using anti-Mafia RICO laws. The individuals were accused of exploiting New York’s “no-fault” insurance law, which allows drives and passengers to obtain up to $50,000 for accidents injuries regardless of fault.

Prior to that, another ring was busted in Brooklyn, leading to the arrest of 16 people for allegedly ripping off companies for $400,000 between 2009 and 2011.

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