Car Insurance Fraud in New York
The State of New York is a no fault state in terms of car insurance. This means that, regardless of who is at fault, car insurance companies in New York are responsible for paying the damages and expenses of their policyholders. This differs from most at fault states where the driver who causes the accident is responsible for paying all damages.
In at fault insurance states, it is easy to determine who is at fault and even easier to target who to take to court and sue for additional damages. In a no fault state, having each person responsible for their own damages regardless of fault means that there are fewer New York car insurance lawsuits jamming up the court system.
Unfortunately, no fault states have an additional problem on their hands as it seems they are a hotbed for insurance fraud. New York has one of the highest rates of suspected insurance fraud claims in the country. Recent evidence suggests that nearly one of every five insurance claims in New York are possibly fraudulent.
How does it work? Those seeking to benefit from insurance claim money either deliberately stage accidents or purposely cause them in order to file an insurance claim. Medical institutions in on the scheme, often called medical mills, help these criminals to file fraudulent health insurance claims that often amount to thousands of dollars in insurance money. The New York Department of Financial Services, which governs car insurance for the state, put together fraud investigation teams to root out these illegal activities. Under the state law, claimants can earn up to $50,000 in medical payments per accident.
Fraud has gotten so bad in New York that an independent organization, the New Yorkers Stand Against Insurance Fraud (NYSAIF), is working to educate the public about car insurance fraud and work with state legislators to find ways to discourage or eliminate the problem.
It may seem like car insurance fraud is more a problem for insurance companies, law enforcement agencies and the local justice system, but fraud affects all insured drivers. The cost of paying out these insurance claims has to be recouped from somewhere and that almost always means raises the premiums for legally insured drivers even though they are doing nothing criminal.
New York residents, especially those in Brooklyn, have some of fairly high premiums already and can expect those prices to continue to rise until car insurance fraud slows down in their territory.