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New York lawmaker attempting to reform state's no-fault policy

Posted On Thu, February 24, 2011

The rate of auto insurance fraud in Florida has been in the headlines with some frequency lately, but another place where it appears to be running rampant is New York.

According to Fraud Costs New York, a coalition dedicated to stopping auto insurance fraud, the state's high premium rate is largely due to its no-fault policy, which the coalition considers "outdated." But State Representative James Seward is trying to make the policy less vulnerable to fraudsters.

"New York's no-fault auto insurance system is broken and needs to be fixed now," said Seward, chairman of the state senate's insurance committee. "My bill would bring fundamental change by cracking down on criminals who, in essence, impose a 'fraud tax' on honest, hardworking New Yorkers by gaming the system."

One of the changes Seward is proposing would allow insurers to pay claims after a 30-day period has expired. Under current law, claims cannot go unaddressed for more than 30 days, and if that time expires, a claim must be paid even if the insurer planned on denying it.

According to the Insurance Information Institute, 12 states and Puerto Rico have no-fault auto insurance laws on the books.


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