When you think about insurance fraud you probably think of a staged accident/faked injury. However, something as small as listing the wrong address on your insurance application or failing to disclose a new driver can be considered insurance fraud.

Under New York State Penal Law Section 176.05 a person is guilty of insurance fraud when he or she knowingly and with intent to defraud make a written statement on an insurance application that contains materially false information or conceals for the purpose of misleading, any fact material to obtaining of insurance.

This type of fraud is commonly referred to as rate evasion and it comes in many forms. We will concentrate on three common types of fraud: out-of-state rate evasion; in-state rate evasion; and failure to disclose a new driver.
Out-of-state rate evasion occurs when people register their vehicle or lists on their insurance the primary residence/garage that a vehicle will be located in a state that is not the state in which they reside, to take advantage of lower rates that might exist in a neighboring state.
Similarly, in-state rate evasion involves listing a vehicle’s in-state garage location as a location in-state other than where it is actually being garaged. Many insurance companies based their premium rates on the county or ZIP code where a car is garaged. Living in a ZIP code with a dense population typically will lead to higher premiums as the higher the chances that a vehicle will be in an accident increase. Conversely, premiums may be lower if you listed a ZIP code where the cows outnumber the cars on the road. So, by listing the in-state garage in a location without a big population base, insureds may receive a lower premium.

Auto insurance follows the vehicle and not the driver. If a vehicle is insured, there will be coverage as long as the driver has permission to use the covered vehicle. For this reason, there may be a temptation not to disclose to the insurance carrier the existence of a new driver in the household. These new drivers are typically newly licensed teenagers with no driving record, whose addition to the policy will almost certainly mean an increase in premium the insured has to pay.

While listing a false address on an insurance application or “forgetting” to disclose that there is a new driver in your household may seem harmless, doing so is against the law and if caught, violators will be subject to a large fine, jail time or both. Additionally, if a claim does occur, you may find that an insurance carrier will simply refuse to pay and rescind the policy, citing a material misrepresentation of the facts on the insurance application. This means that you will be left without insurance and have to pay any expenses from an accident out of your own pocket. Saving a few hundred bucks in premium could end up costing you thousands and thousands in fines and bills.
The consequences associated with rate evasion far outweigh the potential benefits you might receive from a lower premium figure.