Senator Charles E. Schumer on Friday announced that he is introducing the cheaper car insurance Act of 2010, legislation that would institute new federal penalties for auto insurance fraud.
This bill comes on the heels as a new report revealed the increasing incidence of auto insurance fraud in New York, along with the drivers’ insurance rates. Suspected fraud cases have increased by 33% since 2006 in New York alone, leading to an average rate hikes of 6.3% in 2009. Schumer’s legislation would go after criminals who are committing the fraud, and that they should pay the bill. It would also impose much tougher penalties for offenders who deal with auto insurance fraud.
Schumer said, that this Cheaper Car Insurance Act of 2010 will send a very simple and strong message to anyone who are into auto insurance fraud or been planning of doing it and that the message is clear: expect to be arrested and tried in federal court by federal prosecutors. A convicted offender will face a minimum of five to fifteen years of imprisonment. He added that auto insurance fraud is a serious crime which causes problems to the drivers and companies and the main reason why insurance rates continue to rise. He further added that he will continue to fight until it becomes a law in New York.
New federal penalties in The Cheaper Car Insurance Act of 2010 for auto insurance fraud are being worked out. Currently, offenders are prosecuted only at the governmental level, where they often go with a simple refund. By law, a judge can impose fines of up to $ 100,000, more if the damages were beyond this amount, and five to 15 years in federal prison, depending on the individual’s role in the fraud.
Auto fraud is detrimental to all, if car insurance bill continues to go up even if the car’s value goes down, he added. Small businesses are hesitant to buy additional vans because of the high cost of insuring them. Travelers and vacationers to New York will wonder why car rental insurance rates are a lot higher as compared to other cities and states.
Some estimates say that scams cost the insurance companies and drivers a whopping 229 million U.S. dollars last year alone.