BILL NUMBER: S6275
SPONSOR: SCARCELLA-SPANTON
 
TITLE OF BILL:
An act to amend the insurance law, the penal law, and the vehicle and
traffic law, in relation to authorizing the investigation of insurance
fraud and fines related to the commission of such crime and combatting
the theft of motor vehicles
 
PURPOSE:
The purpose of this bill is to reduce the incidence of motor vehicle
theft and motor vehicle insurance fraud including fraud committed by
those who misrepresent where they live, operate their motor vehicle, and
garage such vehicle for insurance coverage purposes. By misrepresenting
where such motor vehicle operators truly live and operate their motor
vehicle, these persons obtain inappropriate reductions in their auto
insurance premium rates and such costs are shifted to other law abiding
motor vehicle owners. By reducing auto theft in New York, that will help
to curtain future premium rate increases for motor vehicle insurance,
especially in our urban areas.
 
SUMMARY OF PROVISIONS:
Section 1: Adds a new Insurance Law section 401(d) to explicitly expand
the authority of the Superintendent of Financial Services, under the
Insurance Fraud prevention Article, to investigate fraudulent activities
with regard to motor vehicle operators who have not secured automobile
insurance coverage or who misrepresent the principle place where such
automobiles are garaged and operated.
Section 2: Amends Insurance Law section 405(a) to authorize the Insur-
ance Frauds Bureau to accept reports of suspected fraudulent insurance
transactions from any self-insurer with regard to motor vehicle liabil-
ity coverage.
Section 3: Amends Insurance Law section 2133 to expand the scope of
prohibition for any insurance company, insurance agent, broker, or other
person who knowingly possesses, produces, transfers or uses a forged
insurance identification card to also include other false insurance
documents which purports to evince insurance coverage when it is not in
effect or is at limits less than those stated on the document.
Section 4: Section 1. Amends Section 165.06 of the Penal Law, to include
unauthorized use of a motor vehicle in the first degree, grand larceny
of a motor vehicle, criminal possession of a motor vehicle, auto strip-
ping or illegal possession of a vehicle identification number as predi-
cate convictions for the unauthorized use of a vehicle in the second
degree.
Section 5: Amends Penal Law section 170.10 to add a new (6) to the list
of documents that the forgery of is considered to be forgery in the
Second Degree. The new document that, if forged, would be forgery in the
Second Degree are certificates of insurance or an insurance identifica-
tion card.
Section 6: Amends Penal Law section 170.15 (Forgery in the First Degree)
to include as forgery in the first degree, the fraudulent making,
completion, or alteration of 10 or more written instruments, such as
certificates of insurance or insurance identification cards:
Section 7: Adds a new Penal Law section 175.50 to make it a class E
felony to offer a false application for motor vehicle insurance or
registration. Under this provision, anyone who submits to the Department
of Motor vehicles or to an auto insurer (to obtain an auto insurance
policy or insurance identification card) any document that contains a
false statement or information with regard to where such applicant
resides or where such applicant's motor vehicle is garaged or operated
and such document is used directly or indirectly to register an automo-
bile shall be a class E felony.
Section 8: Amends Penal Law section 176.05 which defines the term
"insurance fraud". Under this bill, the term "insurance fraud" is
expanded to include any false document used to secure either insurance
coverage, file an insurance policy claim, or obtain payment for personal
lines insurance coverages (i.e. auto and homeowners insurance). Under
current law, only false documents that are used to secure commercial
lines policies or money for claims against a commercial lines policy
(i.e. general liability or business property policies) are considered to
be insurance fraud. This bill expands the types of insurance policies
that persons cannot lie about to obtain coverage or claims payment to
include personal lines coverages such as motor vehicle liability or
homeowners insurance.
Section 9: Amends Penal Law section 176.15 to expand the scope of insur-
ance fraud in the fourth degree to include the operation of a motor
vehicle on a public highway when such operator is insured by a policy
issued under the laws of another state, but such person in fact princi-
pally lives and garages their vehicle in New York.
Section 10: A new Vehicle & Traffic Law section 201-a is added to give
law enforcement personnel access to any individual's street address,
vehicle and EZ Pass information provided to the Department of Motor
Vehicles to register a motor vehicle in this state or to obtain a driv-
er's license in this State. This information can be used to ensure that
those who submit information to the Department submit accurate informa-
tion of their residence and where they operate and garage their motor
vehicle for auto insurance premium rating purposes.
Section 11: Amends Vehicle & Traffic Law section 401(1) to require that
all those who file an application to register an automobile in New York
must provide their street address where they reside if such person uses
a Post Office box for their location of residence. The purpose of this
provision is to curtail those that submit fraudulent information on
where such applicants truly reside.
Section 12: Amends Vehicle & Traffic Law section 502(1) to require that
all those who file an application for a driver's license must provide
their street address where they reside if such person uses a Post Office
box for their location of residence.
 
JUSTIFICATION:
The purpose of this bill is to address the ever increasing incidence of
auto theft and auto insurance fraud in this state. These two illegal
activities are related to each other because by reducing the incidence
of auto theft, that will reduce the cost of providing auto insurance in
this state.
More particularly, this bill seeks to address insurance fraud that is
perpetrated against those law abiding operators of motor vehicles that
accurately and truthfully disclose where they reside and operate and
garage their vehicles, regardless of where they live. Some who live in
high auto insurance rate areas, such as the New York City metropolitan
area, misrepresent where they live, garage and operate their automobiles
and fraudulently maintain that they live in low insurance premium rate
areas that are either upstate or out of state.
There is a prevalence of in-state residents misrepresenting their true
place of residence so that they can obtain much lower auto insurance
rates. Instead of disclosing their true address in high insurance premi-
um places such as, for example, Bronx or Kings Counties, they state that
They live in lower insurance premium rated territories such as North
Carolina, Pennsylvania, or upstate counties that have much lower inci-
dents of motor vehicle theft, car accidents or judgments relegated to
motor vehicle accidents. This issue was a topic of a report released in
2006 by the State Commission on Investigations. Since 2006, the commis-
sion has sunsetted, yet the problem is even more pervasive than ever
before.
This situation of rate evasion, while artificially lowering the insur-
ance rates of those who fraudulently do not disclose their true residen-
tial address, substantially increases the insurance premiums paid by
those who truthfully disclose their actual place of residence and where
they operated and garaged their cars. This bill should bring more equity
to those who purchase auto insurance coverages in this state and ensure
that everyone pays their fair share for auto insurance coverages that
matches their actuarial risk of potential physical damage or theft of
their automobiles, risk of personal injury or liability exposure due to
judgments obtain in local courts.
Section 4 of this bill addresses an inconsistency in the law as it
relates to auto theft crimes. Under current law, a person may be charged
with the crime of unauthorized use of a vehicle in the second degree if
he or she has a prior conviction for unauthorized use within a 10 year
period of the new offense. However, this enhancement does not apply if a
defendant's prior convictions include more serious offenses such as
grand larceny, or other vehicle related crimes. This bill corrects this
shortcoming by including the offenses of unauthorized use of a vehicle
in the first degree, grand larceny, criminal possession, auto stripping,
or illegal possession of a vehicle identification number among the pred-
icate convictions for charge enhancement.
 
LEGISLATIVE HISTORY:
2024; Held in Insurance Senate Committee.
 
FISCAL IMPLICATIONS:
None
 
EFFECTIVE DATE:
180 days after it shall have become law, provided however, that sections
4, 5, 6, 7, 8 and 9 shall go into effect on November 1, next succeeding
the date on which it shall have become law.

Statutes affected:
S6275: 401 insurance law, 405 insurance law, 405(a) insurance law, 2133 insurance law, 170.00 penal law, 170.10 penal law, 170.10(5) penal law, 170.15 penal law, 176.05 penal law, 176.05(1) penal law, 176.15 penal law, 401 vehicle and traffic law, 401(1) vehicle and traffic law, 502 vehicle and traffic law