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Out-of-State Drivers Enjoy Low N.C. Rates

Aug 17, 2007


RALEIGH -- Auto insurance rates for North Carolina motorists are some of the lowest in the nation. That's a fact that both attracts and is threatened by drivers from out of state who register their cars here to buy cheap insurance.

Over the past few years, the N.C. Department of Insurance has noticed an increasing number of claims -- requests for payment after an accident -- coming from the New York and New Jersey area, said Al Koehler, director of the Investigations Division.

"At the same time, the insurance departments and DMVs up there are telling us they're seeing a lot of North Carolina tags," he said.

As the number and cost of claims for accidents up north increases, insurers will have to charge more to cover their losses.

"It's going to eventually raise our rates," Koehler said.

Chrissy Pearson, a spokeswoman for the department, said it is difficult to calculate exactly how many such drivers are out there. But she said the department believes there could be "tens of thousands" of drivers from other states who fraudulently obtained North Carolina insurance and registration.

Right now, North Carolina has the fifth-lowest auto insurance rates in the nation, according to statistics posted by the National Association of Insurance Commissioners, an industry trade group.

That draws drivers from states where rates are more expensive, particularly in the Northeast, who come and register their car here, buy insurance and then head home. Currently, that's a crime under hard-to-prosecute federal laws but not under state law.

The Department of Insurance this year asked the legislature to make the practice -- called "rate evasion" -- a crime. A bill to do just that passed the House and Senate unanimously and now awaits Gov. Mike Easley's signature or veto.

On the day the Senate gave its approval to the measure, six people from New York City were killed in a Virginia car crash. According to the Virginian-Pilot of Norfolk, the driver had just stopped in Greensboro to buy auto insurance before heading on vacation to Virginia Beach and then home to the Bronx. The driver used a passport and an I-94 Form, an immigration document, and provided some proof of residency at a Greensboro address, the newspaper reported.

Under the rate evasion law passed by the General Assembly, applying for North Carolina insurance in that way would be a misdemeanor, punishable by fines of up to $1,000 per violation plus the possibility of 30 days in jail.

Because the punishment is so light, Koehler said the measure will not lead to many prosecutions of individual drivers.

"No district attorney is going to extradite someone from another state over a misdemeanor," Koehler said.

An earlier version of the bill that passed the House would have made rate evasion a felony, but it was changed in the Senate.

"We might have to come back later and do something strong," said Rep. Hugh Holliman, who helped draft the original bill.

Other portions of the law may be more useful, Koehler said.

Most motorists will be required to have a North Carolina drivers license before they register a car here, and registration agents will be required to keep more detailed records so that violators can be tracked down once a discrepancy is discovered.

Also, the agency will have new clout to go after insurance agents who advertise their services to broker N.C. policies for out-of- state residents.

Contact Mark Binker at (919) 832-5549 or [email protected]

(c) 2007 Greensboro News Record. Provided by ProQuest Information and Learning. All rights Reserved.

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