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Report: New York Auto Insurance Fraud Rampant

A new report from the National Insurance Crime Bureau indicates that one out of every three auto insurance claims made in New York City is fraudulent. It’s one of the top cities for allegedly fraudulent claims potentially linked to organized crime.
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Our New York City insurance fraud lawyers know that insurance agencies, and auto insurance agencies in particular, are cracking down more than ever on insurance fraud. And in light of information that false auto insurance claims add approximately $240 million to insurance premiums just in New York City alone, the whole thing is pitting neighbor against neighbor – literally.

The New York Post recently reported that Staten Island residents are flooding lawmakers to tip them off to neighbors who are registering their vehicles out-of-state illegally so as to reduce their auto insurance costs. New York has the fourth-highest car insurance rate in the nation.

In Brooklyn, for example, the average insurance premium is $2,000.

The New Yorkers Stand Against Insurance Fraud reports that more than one-tenth of all vehicles owned by New Yorkers are registered out-of-state for this reason.

Our New York legal team has ample experience in representing both insurance carriers and policy holders, so we bring a unique perspective to the table that ultimately benefits our clients. As of right now, the enforcement on out-of-state registrations is essentially non-existent. State legislators are currently working to draft a measure that would change that.

But it’s worth noting that registering your vehicle out-of-state is far from the only type of auto insurance fraud in New York.

One of those involves third-party repair shops and counterfeit airbags. Let’s say you are in a crash. You take your vehicle to be repaired, your insurance picks up the tab. However, you might only later find out that the airbags in the vehicle are counterfeit – meaning the insurance company has paid for junk and the driver is left with a vehicle that isn’t safe.

Another common type of auto insurance fraud is in the form of staged accidents. The NICB reports that there has been a more than 100 percent increase in this type of action in the few short years between 2008 and 2011. In many cases, two drivers will work in a team to involve another unsuspecting person in an accident so that they can collect the insurance money.

Some unsuspecting victims have fallen prey to agent fraud. This is a form of fraud whereby the insurance agent pockets a consumer’s money, yet doesn’t actually establish the insurance. The consumer only finds out about it when they are involved in a wreck and find out they aren’t covered. Another form of this is something called sliding, in which an agent may bulk up your plan with services or features you don’t want and for which you didn’t ask. This boosts the agent’s commission, but costs the consumer several hundred dollars annually.

No matter what your situation or whether your are a policy holder, body shop or an insurance carrier, we are here to fight for your rights.

The Law Offices of Ira S. Newman provides insurance and fraud litigation representation in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or send us an e-mail.

Additional Resources:
Six Shadiest Auto Insurance Fraud Schemes, April 2, 2013, By Michael Estrin, Fox Business
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NYC Sandy Insurance Claims Fast-Tracked By Lenders, City, Dec. 18, 2013, Fraud Defense Attorneys