No Fault Scams on the Rise in New York

One of the biggest causes of high cost of insurance in New York is fraud. Fraudsters stage phony accidents and send claimants to crooked lawyers and their”medical mills” to get money for bogus injuries.

Brooklyn DA Charles Hyness said “There is nothing more frustrating than closing down a criminal-medical mill, only to see the same players open one with a new name a few weeks later,”

As the suspected cases jumped more than 30% since 2006, so are driver’s rates for insuring their vehicles in New York. Even though scams are everywhere, it is more so in Bronx and Brooklyn. “There’s a lot of bad guys out there who are gaming the system and are figuring out ways to circumvent the system,” said state Deputy Insurance Superintendent Steven Nachman.

Not only have the number of fraudulent cases increased, but so has the average payouts per auto insurance injury claim. Last year’s average claim amount was $8,690 – up more than 55% since 2004.

Robert Hartwig, president of the Insurance Information Institute claims no-fault fraud to be a $1 billion problem. “It’s a little bit like deja vu and it’s a really unfortunate deja vu,” Hartwig said.

State Senate Insurance Committee Chairlan Neil Breslin (D-Albany) is really trying to implement a major reform measure in order to curb this abuse.

“It was enraging to learn that some ruthless thieves are deliberately causing car accidents in order to make themselves easy money,” Breslin said.

“Not only are unsuspecting drivers placed at risk, but they’re also stuck footing the bill on skyrocketing insurance premiums,” he added.

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