UPDATED: Mar 13, 2020
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While the situation in New York hasn’t gotten to the point of the mass insurance fraud that takes place in Florida, which leads the nation in all types of car insurance fraud, there are new calls from prosecutors and legislators alike to address what is described as a growing epidemic of questionable claims throughout New York.
According to the Insurance Research Council, more than a third of all no-fault insurance claims made in the New York City area look to have elements of fraud involved. That means they have inflated medical costs, or some other issue that raises suspicion of the validity of the crash. A full 14 percent of the claims involved over-billing or excessive medical costs. These incidents are so common they’re overwhelming New York City.
“Those who engage in insurance fraud are actually hitting all of us in our pocketbook,” said Queens District Attorney Richard Brown.
And Brown is correct. The costs associated with insurance fraud don’t simply harm insurance companies, but they’re also passed on to policyholders with higher premiums across the board. In Florida, it is estimated that fraud adds nearly $90.00 to every premium.
In general, the schemes involve staged car crashes, and then claims are made under no-fault Personal Injury Protection (PIP) coverage. PIP provides up to $10,000 in medical costs for every individual involved in an accident. Healthcare providers such as clinics and individual physicians are involved. They provide no medical treatment, but charge the insurance companies and pay off the driver and passengers who perpetrate the staged crash. Law enforcement officials indicate that most who take part in these fraudulent claims have ties to organized crime.
“Staged auto accidents are a dangerous criminal activity that targets innocent drivers with increasingly bold schemes aimed at defrauding insurance companies,” says Loretta Worters, vice president of the Insurance Information Institute, which is located in New York City. “Not only do honest policyholders ultimately end up paying more for auto insurance, but those committing the fraud can cause serious injuries or death.”
Staged accidents don’t just cause problems for insurance companies – they can also lead to aggravation for drivers who are victims of them as well. Beyond inconveniences such as dealing with their wrecked automobile, potential injuries and other issues these staged wrecks cause, they can impact a victim’s insurance rates as well. Higher rates and even policy cancellations are common outcomes.