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Lawmakers target New Yorkers illegally seeking cheap car insurance

By Posted : 12/07/2011

auto insurance quoteSome enterprising New York residents are registering their cars in states with cheap auto insurance premiums to save money, but a two state lawmakers are cracking down on the fraudulent practice.

State Sen. David Carlucci (D-New City), says the scofflaws cost New York millions every year. He wants to strengthen regulations to stop them.

"We don't have up-to-date laws so it's very easy for people to commit auto insurance fraud," Carlucci said during a press conference this week outside the New York Department of Motor Vehicles district office in West Haverstraw.

Carlucci says drivers who illegally register their cars in another state cost their cities and towns money on revenue from registration fees, and uncollected parking and moving violation tickets. Further, other drivers have to shoulder rising car insurance rates to make up for what car insurance companies lose because of the rule-breakers.

The bill, which is also sponsored by state Sen. Jeffrey Klein (D-Bronx/Westchester), would:

  • Require that individuals who file an application to register a vehicle or to get a driver's license provide a location of residence or street address alongside any post office box listed.
  • Give police access to the physical street address of the driver's residence or garage location.
  • Provide the state's insurance regulators more tools to cross-reference driver's insurance information with where they report their primary physical address to be.

"We have a broken system" when it comes to monitoring residents who register out-of-state, says Jason Elan, Sen. Carlucci's communications director. "We hope this will go a long way to fixing that system."

A 2006 report from the New York Commission of Investigation says that the following states were the most common destinations for out-of-state registrations:

  • Pennsylvania
  • North Carolina
  • South Carolina
  • Virginia
  • Florida
  • Ohio
  • Maryland
  • Delaware
  • Georgia

Carlucci noted in his press conference that Pennsylvania Attorney General Linda Kelly recently found 100 New Yorkers sharing one out-of-state post office box address.

Just how much are they saving in car insurance by breaking the law?

Drivers in New York who illegally register in states like Pennsylvania, North Carolina and Florida can save up to 20 percent to 30 percent on car insurance a year, according to Carlucci's s office.

To get a more precise take on the numbers, Insurance.com did its own calculations. On a nationwide basis, the average owner of a 2011 Ford Edge SEL (whose driver, 40, has a clean record and is seeking recommended levels of liability, comprehensive and collision coverage) pays about $1,275 a year, according to data gathered by Quadrant Information Services. The average New York state resident pays $1,290, just a bit more.

But move to one of the New York City boroughs and things get expensive. The cheapest quote we found for Brooklyn was $1,976 a year. For Bronx Park on Manhattan, the lowest rate was $2,190.

Take that Ford Edge across the Pennsylvania line in Lancaster and you can get a yearly rate as low as $414. Go south to Wilmington, N.C., and our New Yorker would still save a bundle by paying just $963. In Florence, S.C., he'd pay as little as $818.

But such a move wouldn't be easy, says Penny Gusner, a consumer analyst covering the car insurance industry.

"New Yorkers working the system need to go through a lot of work in Pennsylvania to get cars registered and insured there," she says. "You can only get title and registration documents in Pennsylvania if you have a valid photo driver's license, photo ID card or U.S. armed forces Common Access Card."

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