New, Tougher Penalties For Staging Auto Accidents

March 25, 2012 - PRLog -- The Senate passed laws (S.4507B) would enable insurance companies to retroactively cancel policies obtained by people who commit auto scams.

People that plan to commit auto fraud often take out auto insurance policies and pay for the first premium with a bad check, an unauthorized bank account or stolen credit card. Once the policy is actually obtained, they commit scams through a staged accident or any other means. Under current law, the insurer cannot cancel the coverage regardless of the fraud. This bill would allow an insurer to retroactively cancel an automobile insurance coverage in the first sixty times if the initial premium repayment is not honored by a bank due to insufficient funds, non-existence of a bank account, or unauthorized utilization of a bank account.

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“We must make every effort to prevent incidents of car insurance fraud, the effects of which are being felt by all New Yorkers as the cost of insurance premiums continue to rise,” Senator LaValle stated. “The bills passed today create a framework to allow for the protection associated with legitimate insurance customers as well as enhances penalties so that police force can prosecute those breaking the law.”
This measure would bring Ny in line with the other large no-fault states and remove any incentives with regard to staged accidents. In fact, only seven other states (AZ, CO, KS, ME, MD, North carolina and SD) do not allow for retroactive cancellation. Innocent victims of uninsured drivers would be covered under their own policy or the Car accident Indemnification Corporation.


The actual Senate also passed a bill (S.1685) that would begin a new felony-level crime of staging a motor vehicle accident. A person who operates a car and intentionally causes a collision with intent in order to commit insurance fraud might now face the control of staging a motor vehicle accident. It might be a class D felony, punishable through up to seven years in prison.

The Senate also passed laws that would make the use of “runners” unlawful in New York. A “runner” is a person who receives money for obtaining clients or patients to participate in insurance fraud. The balance (S.2004) is another calculate designed to cut down on insurance scams.
Runners are commonly used in the brand new York City metropolitan area to steer accident victims towards unnecessary medical treatments. Insurance companies have to pay the fraudulent claims and must make up the cost through greater auto insurance premiums. Medical mills submit fraudulent medical statements for unnecessary tests with regard to phony accident victims. Under the actual state’s no-fault insurance law, accident sufferers can build up $50,000 worth of medical bills that must be compensated by insurance companies. Sometimes treatment centers steal identities and policy numbers to commit scams, even using information of people who are deceased.

The laws makes it a class E felony, punishable by up to four years in prison, to act as a runner or even hire another person to act like a runner.

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