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New York Senate passes bill making auto insurance fraud a felony

Posted On Thu, March 24, 2011

People committing auto insurance fraud in New York are being put on notice, as legislators are that much closer to passing harsher penalties.

The New York State Senate passed a bill that would make committing insurance fraud a felony.

The hope among legislators is that the bill will help lower auto insurance costs for policyholders.

"Innocent people should not be made unwitting pawns in a criminal enterprise," said Republican Senator James Seward, who sponsored the bill and is the senate's insurance committee chairman. "This legislation provides a bona fide deterrent to those who commit no-fault fraud, and will improve highway safety and reduce insurance costs for all."

Depending on the specifics of the staged accident and the perpetrator's criminal history, auto insurance fraudsters would be charged with a class B, C or D felony should the bill be passed.

The bill's next destination is the Assembly.

While the legislation would target motorists who stage accidents, that is not the most common type of fraud. According to the State of New York Insurance Department, almost nine in 10 insurance fraud cases were related to no-fault auto injury claims.  

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