Bill Cracking Down on NJ Drivers who Obtain Insurance in another State heads to Gov’s Desk

nj insurance tlsLegislation to crackdown on insurance fraud was given final legislative approval by the Senate this week.

The bill, sponsored by Assembly Democrats Wayne P. DeAngelo, Joseph Lagana, Carmelo Garcia and Bob Andrzejczak, targets residents who fraudulently obtain automobile insurance in another state, even though New Jersey is their principal residence or they principally keep the insured vehicle in New Jersey.

“Insurance fraud is not only wrong, but it costs honest drivers money through higher premiums,” said DeAngelo (D-Mercer/Middlesex). “We’ve made a lot of progress in controlling auto insurance rates, but we still have a long way to go and cracking down on fraud needs to be a big part of that continuing effort.”

DeAngelo said the Office of the Insurance Fraud Prosecutor is currently unable to prosecute so-called reverse rate evasion cases because state law does not include it as a form of insurance fraud.

“The Office of the Insurance Fraud Prosecutor has documented a growing trend of New Jersey residents insuring in North Carolina and Pennsylvania to avoid higher insurance rates,” said Lagana (D-Bergen/Passaic). “The prosecutor has been suggesting this change in the law for more than four years, and we’re going to finally get this done for the benefit of all law-abiding New Jerseyans.”

Under the bill, reverse rate evasion would be considered a form of insurance fraud that violates the New Jersey Insurance Fraud Prevention Act. This bill makes it a crime of the fourth degree.

The bill also specifies that reverse rate evasion constitutes a violation of the New Jersey Insurance Fraud Prevention Act, with the various civil penalties and remedies provided for in that act applying to violations.

“All vehicles that should be registered and insured in New Jersey should be properly registered and insured,” said Garcia (D-Hudson). “Vehicle owners who misrepresent their residence are looking to reduce their own insurance premiums, but this instead results in a loss of revenue to the state, higher premiums for those who properly register their vehicles and reduced revenue for New Jersey insurers.”

“Auto insurance fraud means higher costs for everyone else,” said Andrzejczak (D-Atlantic/Cape May/Cumberland). “That’s why this bill is common sense and fiscally responsible.”

The bill passed the Senate 38-0. It was approved 72-0-0 by the full Assembly in September.


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  1. Your insurance rates will never go down. What is going to happen is now all these out of state drivers will be NJ drivers, the Insurance Co. will say the rates will have to go up because the population of NJ has increased.In the mean time the profits of the Insurance will increase. We loose again.

  2. I don’t understand. Because they bought their insurance in PA or NY, they are more likely to have an accident? What difference does where they bought their insurance make, except to them? Are we just jealous because they bought it cheaper? Maybe if we all did it, the price of insurance would come down. I’m old enough to remember when car insurance wasn’t mandatory. It was cheap as dirt to insure yourself. Maybe we should go to true no fault insurance where you pay just to insure yourself and can’t sue anybody else. I’ll bet that would bring the cost way down. But then again, that would make sense, so it will never happen.

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