Source: Nathan James/Flickr

Legislation aimed at reducing auto insurance fraud in New York State passed the Senate on Monday, bringing the bill which allows insurance companies to retroactively cancel the policies of fraudsters one step closer to law.

The Senate bill was sponsored by State Senator Marty Golden, who describes it in this press release:

Today the New York State Senate passed S1959A, sponsored by Senator Martin J. Golden (R-C-I, Brooklyn), which allows insurance companies to retroactively cancel policies taken out by people who commit auto fraud. These criminals often take out policies and pay for them with bad checks or stolen credit cards just before they stage accidents. Under current law, insurance companies cannot cancel the policy and policyholders wind up paying for it through higher premiums. This bill would take that burden off honest consumers and therefore lower the insurance rates.

“Auto insurance fraud is costing New Yorkers millions of dollars, and it’s time that fair and honest members of our community stop paying for the crimes of others,” stated Senator Golden. “This legislation will give insurance companies the right to revoke insurance policies for those who try to game the system.”

This measure would bring New York in line with the other large no-fault states and remove any incentives for staged accidents. In fact, only seven other states (AZ, CO, KS, ME, MD, NC and SD) do not allow for retroactive cancellation. Innocent victims of uninsured drivers would be covered under their own policy or the Motor Vehicle Accident Indemnification Corporation.

The bill, which you can read here, now moves onto the Democratic-led Assembly, where it has support from a number of Democrats, including local Assembly members Steven Cymbrowitz and Dov Hikind.

Previous versions of this bill – and two others passed by the Senate to combat auto fraud – died in the Assembly.

Auto fraud continues to be an ongoing issue in Southern Brooklyn. The longest-running and largest auto insurance scam ring in history ended in April 2012, when authorities busted 36 individuals – many of them Southern Brooklyn residents – using anti-Mafia RICO laws. The individuals were accused of exploiting New York’s “no-fault” insurance law, which allows drives and passengers to obtain up to $50,000 for accidents injuries regardless of fault.

Prior to that, another ring was busted in Brooklyn, leading to the arrest of 16 people for allegedly ripping off companies for $400,000 between 2009 and 2011.

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  • NYC Cit

    Senate never fails to work for their corporate masters. This will allow insurance co.’s to cancel legit policies right before they have to pay out using this law as an excuse. And the rest of us won’t see our premiums decrease at all, even though insurance co.’s claim that the premiums are so high due to fraud. This isn’t a good thing all around. I bet the next time something like Sandy rolls around a lot of people with damaged cars will see the policies retroactive cancelled. Very nice… thank your Senator for this… Schumer and Gillibrand were probably on the front line of ramming this through the senate while screaming “it’s for the KIDS!!!! they are dying in these staged accidents”… what a load of crap.

    • BrooklynBus

      How can thy cancel anyone’s policy retroactively? Wouldn’t they first have to prove you committed auto fraud?

      • NYC Cit

        They will, it’s real easy. Supposedly your car was hit and now you file a claim. The adjuster comes out and takes pics, records mileage etc. Now the insurance co looks at his report and says, Mr BrooklynBus you said when you applied for the policy that you will be driving 10,000 miles/year, now we see you drove 10,500 and you didn’t notify us in writing about it like it’s specified in your policy in font #2 on page 47. You were trying to commit fraud, your policy is cancelled as of your last payment period which was 5 months ago. Have a nice day.
        Then what?

    • user123

      From skimming the bill, which is def more than you did, they would only be able to retroactively cancel new policies within the first 60 days so calm your tits.

      Staged accidents are one type of fraudulent claim that is becoming more and more prevalent in New York. Staged accidents begin with bad actors procuring an automobile insurance policy with the intent of submitting a fraudulent claim. In many cases, they procure a policy by submitting a bad payment (either using a nonexistent bank account or stolen credit card information). Most states allow the retroactive cancellation of a policy in the case of a reversed payment to prevent this type of activity. New York, however, does not permit retroactive cancellations; rather cancellations are currently only prospective in nature. That turns into a gold mine where no-fault is involved. The time between the policy is “purchased” to the time it is cancelled provides ample opportunity for no-fault fraud.”

      • http://www.sheepsheadbites.com/ Ned Berke

        “So calm your tits” wins comment of the day. Congrats.

      • NYC Cit

        Watch them go above and beyond with this. Insurance company’s mission in life is not to pay out claims. That’s how they make money. It’s naive of you to think they will do the right thing by you.
        And by the way, where in this article did you see 60 days?

        • user123

          I didn’t. I read it in the bill which is linked in the article. Primary sources are important and good writers like our friend Ned cite them in their writing.

    • http://www.mybrooklyn.com/ MyBrooklyn

      Nothing will change masses of people are so naïve….they are willing to give up their freedoms and financial stability for bogus reasons…

  • whos idea was this

    If my check bounced, they will cancel my account. Back dated? If I don’t have an accident, they ask for payment. If I have an accident, they cancel my policy backdated?

  • whos idea was this

    “These criminals often take out policies and pay for them with bad checks or stolen credit cards just before they stage accidents” Stolen credit card is a crime of itself. Why would anyone pay with a stolen credit card and leave your name attached to it. If the FBI has a problem finding people using stolen credit card , here is a way. They know the name of the registered owner of the car and the information. to get insurance, you must give your name, address, DOB, SS# and you dare use a stolen credit card? or bad check?

  • tinman

    When is the Senate going to pass a bill stopping insurance companies issuing policies in Kings County from extorting us with one of the highest rates in the country? They’ve been doing it for decades with the insurance lobby making sure rates never come down.

  • http://www.bidbrightonbeach.com Lena Pechenik

    anyone surprised? The business as usual. Everything done for the people, just hurt people but benefits corporations.

  • Stutag

    I am really disappointed by most of you that have commented. If you really took the time and read what this is all about, you would feel a lot different. This bill can ONLY benefit each of you! In fact, it might even save your life!! Because we
    have a ‘no fault’ system in New York, there are numerous ‘staged accidents’ or
    ‘arranged accidents’. I do not have the time here to explain all of this.
    The bill that has been approved by the Senate is to remove the incentive for
    these ‘staged accidents’. The retroactive cancellation, is ONLY to be issued
    within a limited time period, and ONLY if the initial premium payment is dishonored
    due to: 1) the non-existence of a bank account, 2) the unauthorized use of the account, and 3) the unauthorized use of a credit card account.
    The bill is NOT designed to take away ANY coverage to those that might get
    hurt, as long as they are NOT the participants in these ‘staged accidents’
    Under our present laws in New York State, the ‘no fault’ laws encourage
    a number of these ‘staged and arranged accidents’ .
    After you fully understand the proposed law, if you think I am wrong, and the proposed law is wrong, please let me know. I would love to hear from you…

    • Alex C

      Bottom line is: will this bill help to bring our premiums down?

      • Stutag

        It could bring down some premiums, in time… What is more important, it could eliminate many people getting injured or killed. How would you feel when a car with 5 people, suddenly stops short
        in front of you, in a ‘planned accident’, and you have to crash in to them?

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