U.S. Reps. Laura Gillen (D-NY), Troy Nehls (R-TX), Josh Gottheimer (D-NJ) and Vince Fong (R-CA) introduced the Stop Auto Fraud Act to lower insurance premiums.
The legislation would make motor vehicle collision fraud a federal crime, officials said. As a result, it would improve safety for drivers and lower car insurance rates nationwide. The lawmakers’ offices said the legislation targets insurance fraud schemes where bad actors deliberately cause, stage or fabricate motor vehicle accidents to file false claims and defraud insurance companies for large cash payouts.
“Long Islanders pay some of the highest car insurance rates in the country and ‘crash for cash’ schemes on our roads are driving rates even higher,” Gillen said. “When fraudsters stage car wrecks to scam their way to huge payouts, they’re putting lives at risk and forcing responsible drivers to bear the costs. I’m proud to lead this bipartisan bill to hold these criminals accountable, make our roads safer and lower sky-high car insurance costs.”
In 2023, insurance carriers said there were more than 38,270 incidents of suspected motor vehicle insurance fraud to the New York State Department of Financial Services; a 58 percent increase of the number reported in 2020. Recently, Florida, Louisiana and New York have enacted laws targeting criminals who stage elaborate accidents to win payouts from insurance companies or from juries.
The Stop Auto Fraud Act would make staging or fabricating a motor vehicle crash and submitting a fraudulent claim, a federal crime. The bill imposes penalties, up to and including jail time, for violations. Any collected fines would be paid to the Highway Trust Fund for local and interstate roadway, bridges and mass transit funding.
“Auto claims fraud, including intentional crashes, staged accidents, fabricated medical bills, and AI-altered photo evidence, drives up costs throughout the system and ultimately raises auto insurance premiums for everyone. States that have enacted targeted anti-fraud and staged accident reforms have strengthened enforcement, disrupted organized fraud rings, and helped stabilize auto insurance markets, with some states even experiencing premium reductions,” Sam Whitfield, American Property Casualty Insurance Association (APCIA) senior vice president of federal government relations, said. “By giving law enforcement additional tools to combat organized crime fraud, this legislation addresses a significant driver of rising auto insurance claim costs and helps protect consumers from unnecessary premium increases.”
The legislation is endorsed by the National Insurance Crime Bureau, American Trucking Associations, American Bus Association, Truck Renting and Leasing Association, American Property Casualty Insurance Association (APCIA), National Association of Mutual Insurance Companies (NAMIC), National Tank Truck Carriers Association, Truckload Carriers Association, Trucking Association of New York, Texas Trucking Association, Southwest Movers Association and United Motorcoach Association.