Golden Seeking Crackdown On Illegally Registered Out-Of-State Vehicles

People trying to save on auto insurance have taken to illegally registering their vehicles out of state. City & State is reporting that local politicians, led by State Senator Marty Golden, are hoping that stiffer penalties will drive down this form of abuse and subsequently lower rates for drivers.

The numbers on fraudulent vehicle registration are staggering, costing drivers $229 million annually nationwide. The crime is most prevalent in New York City with more than 10 percent of vehicles being fraudulently registered. City & State described how the crime perpetuates itself:

Car insurance is determined not by state but by ZIP code. Drivers in the five boroughs of New York City pay 60 percent higher combined insurance premiums than the state average, according to a 2011 report commissioned by the Independent Democratic Conference. Albany and the Capital Region pay the state’s lowest premiums.

As a result of the high costs, drivers in high-premium ZIP codes are those most likely to register with fraudulent addresses. The IDC study found that 1,650 vehicles in New York were registered to 14 residential Pennsylvania addresses, or 120 vehicles per locale. Fraud reduces the total number of people insured, premiums inch up and car owners increasingly have the incentive to purchase insurance illegally due to a progressively more expensive market.

Overall, auto insurance fraud persists because of a general lack of enforcement. In other states, there is a lack of stringency when it comes to proving residency. Once an out-of-state plate is issued, it becomes even harder to prove fraud.

The legislation, which has had no problem getting passed in the Senate, frequently runs into trouble in the Assembly. Assemblyman Kevin Cahill, the chair of the Assembly’s Insurance Committee, blamed a difference in overall vision with the Senate in attacking the problem.

“We’re looking at all areas of fraud and no-fault insurance,” Cahill told City and State. “We don’t think it should be done on a piecemeal basis. It’s a program that wasn’t created on a piecemeal basis, and legislatures past have tried to address one issue at a time. All the wheels have to turn at the same time.”

Golden, who has put forward legislation that strengthens insurance companies in their ability to cancel fraudulently purchased policies, spoke to the importance of the bill.

“My bill is to help to bring down the insurance costs in the city … go after the bad payers, lock them up, and you’ll see more registering here,” Golden said.