New York Auto Insurance Reform

April 18th, 2012
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Insurance fraud

“No-fault” insurance has been taken advantage of, and staged accident scams run rampant. While Florida is the most notable, and eagerly attempting to pass legislation against “no-fault fraud”, it is not the only state being targeted by con artists and scammers.

With a no-fault minimum of $50,000, five times as much as Florida, New York is certainly a good mark for insurance fraud. Senators are currently trying to pass reform bills to crackdown on these incidents. New Yorkers are paying an estimated $1 billion a year in insurance premiums due to fraudulent claims driving up costs.

One of the reform Ideas enforces retro-active policy cancellation for those that take out policies illegally. In most instances of ‘no-fault fraud’, the scammer will pay for the initial policy with a bad check, insufficient funds, or with a stolen credit card.

Another method, strengthens penalties for auto insurance cons and anyone involved. Medical clinics that fortify claims with false examination paperwork, would become sought out and shut down. Hiring people to find patients or clients to become
insurance fraud participants would be considered a felony.

Many state no-fault policies are being exploited, and new legislation is being put into action as preventative measures. Perhaps the hardest legislation to pass, and the most effective, is to drop the ‘no-fault’ insurance policy from state mandates entirely. There are only 12 states still utilizing this type of mandatory insurance. It seems, for the most part, the negative ramifications may be outweighing the positive.

No-fault insurance was designed to minimize the amount of law suits regarding auto accident injury. However, no-fault insurance only cover medical expenses and injury, thus it is still possible to engage in law suits for property damage. What do you think? Is a no-fault system really worth keeping?

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