Cross-state Auto Insurance Fraud Alarms Pennsylvania


The insurance fraud filed against 24 individuals raises the alarm on rate evasion.

Cross-state Auto Insurance Fraud Alarms PennsylvaniaLast December 27, headlines in Pennsylvania were filled with stories of the rate evasion case filed against 17 New Yorkers, 6 New Jersey drivers, and 1 Pennsylvania motorist. Twenty-one have been arrested already while the remaining 3 are still wanted by law enforcing agencies.

Rate evasion is the practice of falsifying information and submitting it to the state Department of Transportation, pretending to be residents of a state or owning a house or a garage there. Once registered or identified to be from that state, fraudsters can now get their vehicles or cars insured using auto insurance from the state with significantly lower coverage requirements and cheaper premium rates.

Pennsylvania Attorney General and Insurance expert Tom Corbett said that one of the most significant factors used in computing for auto policy rates is where the car being insured is primarily used and garaged. Corbett adds that large urban neighborhoods such as New Jersey and New York City tend to have more traffic and have more car accident claims. Drivers pay steeper insurance costs compared to drivers from rural areas such as Pennsylvania.

Atty. Gen. Corbett said that by studying figures from past cases of rate evasion committed in the state, average New York or New Jersey fraudsters save as much as $4,000 on insurance costs per year, which is very damaging to the real Pennsylvania drivers. According to Corbett, every year roughly $13 million are paid by Pennsylvania motorists for increased premium rates due to the increased number of rate evasion cases. Corbett said that steepened insurance costs for claim payments are filed by rate evaders while their car accidents are paid for by law-abiding drivers in Pennsylvania.

Local motorists groups are now worried that if cases like this continue until next year, they will be the ones to suffer most and end up paying more than they should. Experts also predict that if rate evaders are not stopped, insurance providers in the state will be forced to execute measures to be more stringent in their screening process before insuring vehicles, which can be damaging on the part of honest Pennsylvania motorists.

On the other hand, state officials said that there is no need to worry as law enforcing offices in Pennsylvania are closely working with other states primarily New York and New Jersey to catch rate evaders and stop them at the early stages of fraud, when they are filing documents that are to be falsely registered.