Are You Committing Rate Evasion?
Unlike what most people think, fraud is a real problem in the field of car insurance. While it's not as prevalent as in both the life and health insurance sectors, it costs a lot of money to insurance firms and honest policyholders each year. Often referred to as rate evasion, car insurance fraud is a fast growing practice allowing a driver to pay less for their insurance premiums than they normally should.
If you've been committing rate evasion, then you'll find this article interesting:
What is rate evasion?
Insurance companies apply different factors to determine the cost of insurance for aspiring policyholders including the registration location. After purchasing their new car and shopping around for auto coverage, drivers get a good idea of what the average monthly premium charge is in their area.
But some people manage to be assessed lower coverage costs because they register their new vehicle in a geographic location where auto insurance is more affordable, and then go back to their area of residence.
So for example let's assume a person currently lives in downtown Manhattan but decides to go buy and register a car in a countryside location such as Moberly, KS. They're guaranteed to save a lot on their annual insurance cost. In fact, such an individual may be able to halve their insurance bill depending on their chosen registration location.
New regulations are on the way
The main reason why rate evasion has become so widespread in the auto insurance sector is because there are no prohibitive laws. To tackle the issue, Howard Goldblatt, who currently serves as the director of government affairs for the Coalition Against Insurance Fraud, suggested that reforms be made in the automobile sector.
The new laws will include a number of sanctions for all those who will be found guilty of this form of fraud. To take advantage of lower auto premiums, fraudsters typically lie on where they park their vehicle. As you might know, garages and parking lots locations help insurers assess the risks associated with policyholders.
According to Golblatt, New Jersey will be the first state to pass and implement anti-rate evasion laws. Other states that have reported the same issue are expected to jump in the bandwagon later.
If you've been committing rate evasion, then it's time to stop, unless you don't being caught and paying a hefty fine. Keep in mind that spotting people like you is very easy since your license plate shows where your car was registered. To learn more, contact a company like Thomas A. Nolfi Inc. with any questions you have.