NJ Assembly Passes Bill Criminalizing Reverse Rate Evasion

After months in committee, the state Assembly approved a bill targeting drivers in New Jersey who buy out-of-state insurance but keep their vehicles in the Garden State.

The proposal in A 2204 criminalizes that practice, called “reverse rate evasion,” as a fourth-degree offense, which carries a penalty of up to 18 months in jail.

Sponsoring Assemblyman Wayne DeAngelo (D-Hamilton) said it is a “growing trend” among motorists trying to dodge the insurance premiums in the state that industry analysts say are among the priciest in the U.S.

According to DeAngelo, North Carolina and Pennsylvania are among the states that most reverse rate evaders pick as their home state for their phony policies.

Last April, authorities in Pennsylvania uncovered a criminal operation that fed false information to motorists in nearby states like New Jersey so that they could engage in reverse rate evasion.

“All vehicles that should be registered and insured in New Jersey should be properly registered and insured,” DeAngelo said in a statement.

The unanimous 76-0 vote on Monday sent the piece of legislation to the state Senate for further consideration.

The landslide vote showed that lawmakers want to fight “loss of revenue to the state, higher premiums for those who properly register their vehicles and [reduced] revenue for New Jersey insurers,” according to DeAngelo.

State prosecutors, currently hamstrung in pursuing cases of reverse rate evasion in court, have recommended for years that the practice be classified as an insurance crime, according to said Assemblywoman Celeste Riley (D-Cumberland), another sponsor for the bill.

“We’re going to finally get this done for the benefit of all law-abiding New Jerseyans,” she said.

Idaho Gov. Signs Bill Penalizing Out-of-State Registrations

A bill in Idaho similarly targeting policyholders who misrepresent their residency to duck coverage costs was finalized by the governor there in March, except the problem there is that out-of-state residents are coming to Idaho for lower insurance prices.

Heavy support helped HB 11 make an easy trip through the Legislature in 65-0 and 34-0 votes in the House and Senate, respectively.

Gov. C.L. “Butch” Otter signed the bill on March 12; it goes into effect on July 1.

Under the bill, insurers can non-renew a policy if “the insured automobile is registered in a jurisdiction other than Idaho.”

Unlike the practice of “reverse rate evasion” in New Jersey, Idaho has faced a problem of residents moving out of the state while keeping their insurance coverage in Idaho because the rates in Idaho are “pretty reasonable,” according to John Mackey, a lobbyist who backed the bill.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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