" Rate Jumping " is an auto insurance industry term for the deceitful practice of applying for auto insurance by listing a home address at a location where insurance premiums are significantly lower than where the insured actually resides.
It is common in New York City to see cars with out-of-state plates. Three reasons come to mind, this can sometimes be a visiting traveler, long distance commuters, or a person performing rate jumping.
Rate jumping really constitutes misrepresentation of a material fact on an insurance application.
In a recent NY court decision, The Appellate Term, First Department states that in a rate jumping case an insurer
can successfully deny no fault benefits to any claimant without having to show that the policy was first cancelled due to material misrepresentation.
Although the Vehicle and Traffic Law does not permit an insurer to cancel an automobile insurance policy retroactively on the grounds of fraud or misrepresentation, an insurer may however express misrepresentation or fraud as an affirmative defense in an action by an insured to recover benefits.
The practice of New Yorkers fraudulently registering motor vehicles in foreign states seems to be expanding, which in turn is costing our state government, insurance companies and
honest consumers significant sums in lost revenue and increased premium.
So, even though the bogus drivers posing to be an out of state driver may pay less, the remainder of honest drivers will end up paying more for registering and insuring their vehicles. This also allows the rate jumpers to escape the real cost and New York and it’s residents will be shortchanged of much needed money.
Protect your personal freedom, financial well being and peace of mind by being honest when applying for automobile and other forms of insurance.
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