If you have lived in New Jersey or near-by for any length of time, you likely know that nearly everything in the state is extremely expensive. The high cost of living also applies to the cost of carrying auto insurance for your vehicle. While the economy has begun to revive in recent years, the lack of cost of living increases for many people living and working in New Jersey made it even more difficult to make ends meet.
According to a March 2015, NJ.com article, New Jersey residents pay the most in the nation for auto insurance. For the last year where figures were available, 2012, New Jerseyans paid an average of $1,220 on car insurance. Drivers in D.C and New York pay the second and third highest rates, respectively. Compare that to an average premium of $535 in Idaho, and it’s no wonder that New Jersey drivers began to shop around to neighboring or other states for insurance coverage.
How Do New Jersey Drivers Commit Auto Insurance Fraud?
As mentioned in the previous paragraph, the main way New Jersey drivers commit auto insurance fraud is by securing insurance coverage in a state with lower rates than New Jersey. Since every state and the District of Columbia has lower insurance prices than New Jersey, drivers who decide they are going to commit fraud can choose any state to attempt to fraudulently secure a policy. However, neighboring Pennsylvania and North Carolina are particularly popular.
These drivers typically claim that they store and drive their vehicle in the state with the lower premium while actually parking and using the car or truck in New Jersey. This practice is known as reverse rate evasion. Since insurance premiums are based on an array of risk factors including population density and road congestion, drivers who commit insurance fraud unfairly and illegally shift their costs onto drivers who dutifully pay the proper in-state rate.
Evading Auto Insurance Premiums Can Carry Felony Penalties
In May 2015, Governor Christie also signed into a law an Act concerning insurance fraud and amending P.L.2003, c.89 and P.L.1983, c.320. Under the law, any person who drives or operates a motor vehicle on the roads or highways of New Jersey while carrying insurance issued in another state is guilty of insurance fraud if the following is true:
- The driver’s principal residence is in New Jersey or the car is predominately garaged in New Jersey
- The driver knowingly makes a written, electronic, or oral statement to obtain out-of-state insurance by claiming that he or she maintains a principal residence in another state when he or she does not; or
- The driver knowingly makes a written, electronic, or oral statement to obtain out-of-state insurance by claiming that the vehicle will be garaged in another state when it will be kept in New Jersey.
New Jersey residents may still insure a vehicle in another state, but they must be careful to avoid running afoul of this statute since it is an indictable offense. Indictable offenses under New Jersey law are roughly equivalent to a felony in other states.
What Penalties Are Provided By the Reverse Rate Evasion Law?
When a person commits 5 or more acts of insurance fraud and the value of the services fraudulently obtained is at least $1,000 a second-degree crime can be charged. Each act of insurance fraud is a separate offense except they may be aggregated to meet the requirements of this charge. If multiple acts of fraud are committed on a single application, claim, or other insurance document each act is a separate offense and can be aggregated to reach the 5 acts of fraud required under this section. Upon conviction, a second-degree crime can be punished by 5 to ten years in state prison among other penalties.
If the five acts threshold cannot be met, reverse rate evasion will be charged with a fourth-degree crime. Upon conviction, fourth-degree crimes can be punished by up to an 18-month prison sentence and a fine of up to $10,000.
Facing New Jersey Insurance Fraud Charges?
Mistakes, oversights, and a broad array of circumstances can lead to the appearance of auto insurance fraud and other types of fraud. At the Law Offices of John J. Zarych our experienced criminal defense lawyers dig deep to figure out what actually happened. We then work to defend your rights and freedom aggressively and diligently. To schedule a free and confidential criminal defense consultation call us at (609) 616-4956 or contact us online today.