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Out-Of-State May Be Out of Mind

April 21st, 2013 Comments off

Have you ever wondered why so many cars parked on a New York City street have out-of-state license plates?  It costs a fortune to own a car and pay for insurance, tolls, gasoline and repairs.  The lure to register and insure a car in a different state where insurance rates are low is strong because New York State’s automobile insurance rates are among the highest in the nation.  But paying less for your annual premium will get you into serious trouble if you have an accident and will likely cost you much more.

A study recently submitted to the New York Senate reported that automobile insurance companies lose approximately $16 billion in lost premiums because of “Insurance Rate Evasion.”  (http://www.nysenate.gov/files/pdfs/InsuranceRateEvasion_Report_PRESSER_0.pdf.).  The only reason the Senate knows about this is because it’s a hot topic with the insurance industry.  And the insurance companies are doing all they can to plug the leaks and recover their losses.

If you report that your car is in an accident, your insurance company will quickly check to see where the accident happened and where you live.  If the accident happened in Brooklyn and your car is registered in another state, don’t expect the insurance company to “fugetaboutit.”  The adjuster will suspect that you may have committed insurance fraud.  He or she will cross check the accident information against your home address and if there’s not a match, they’ll deny your claim.  The company won’t pay to fix your car because you would have deliberately provided false information on your application for insurance.  Check your policy.  Under the “General Provisions” section you’ll find boilerplate language which provides that the company will deny coverage to any insured who has made any material misrepresentation to the company.  And the company will be legally within its rights because your insurance policy is a contract and the company is only obligated to pay claims which are their contractual obligations.  If you breach the contract, the company need not pay for the loss.

Even worse, if you’re injured, you may quickly incur thousands of dollars in medical bills.  When you attempt to collect No-Fault benefits, the company will demand that you appear for an Examination Under Oath (EUO) and ask your questions under oath, swearing to the truth of your answers.  If the company can prove that you lied about your residence in New York, it will deny your claim and you will be responsible for the medical bills.  And don’t think that your health insurance carrier will pay the claim when they discover that you were injured in an auto accident.  You will have to foot the bill yourself.

Furthermore, lying under oath can make your problems much worse.  If you lie to your mother, she may send you to bed without dinner.  If you lie to your wife, she may send you to sleep in another bed.  If you lie to the insurance company’s lawyer after swearing to tell the truth, a judge might make you sleep on a bed inside a 6 ft. by 9 ft. cell because perjury is a crime under Article 210 of the New York State Penal Code.

So think hard before you try to save the cost on your insurance premium.  The money you save will be a fraction of the money you may lose.

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