Misrepresentation of Insureds Address
IF YOU DON’T LIVE THERE, DON’T INSURE YOUR CAR THERE- A COSTLY LESSON IF YOU DO
MISREPRESENTATION OF YOUR HOME ADDRESS TO YOUR INSURANCE COMPANY
Why you should never register your car or insure it in a place where you do not live.
Sometimes I will get a client who was involved in an automobile accident in New York suffering significant injuries who will ask me to represent them for their personal injury claim, but will have one significant issue: Their automobile insurance policy was written for a different residence. Sometimes a different state, but sometimes just a few towns away. Why is this a problem? Lets see.
When you are in an automobile accident in New York there are usually two claims. One claim is for your medical bills, possibly for lost earnings and even for transportation reimbursement to go to and from the doctors office for medical treatment. This is called ‘first party benefits’ and is provided by the insurer for the vehicle which you occupy, either as a driver or a passenger (it would also be provided to a pedestrian hit by the car but for this discussion we will leave them out). First party benefits in New York are provided by the New York Personal Injury Protection Law (New York State Insurance law Article 51) and is usually referred to as “No-Fault” benefits because it is provided to the driver and passenger of the vehicle irrespective of the fault of the driver. No matter whose fault the accident was, if you are the driver or passenger in the vehicle you are afforded No-Fault benefits by that cars insurer.
People who insure their cars surely want to pay the least amount possible and if they move from a state other than New York, they may find that the insurance rates in New York are higher than in the state they came from, like Virginia, North Carolina, for example, or almost any other state. The reason why the rates are different in each state is based upon the risk to the insurance that there will be a claim that they will have to pay, whether that’s a claim of theft of the vehicle, damage to the vehicle or a personal injury claim due to a greater amount of accidents in the state. Generally, the higher the risk of a claim, the more an insurer will charge for the same amount of insurance. This even varies in New York from City to City and town to town, as some Cities and towns are known to have a higher theft rate, more vandalism or even more accidents with, consequently, more ‘No-Fault’ claims by their drivers and passengers and more personal injury claims by the other cars driver and passengers. The insurers policy prohibits fraud, and they consider a person insuring their vehicle in a less expensive town, city or state where they don’t actually reside to be a fraudulent misrepresentation. If a court were to determine that this was a ‘material’ misrepresentation as insurers almost always claim, then the insurance coverage could be determined to be voided and all benefits could be disallowed.
Significantly, the driver of a car who might have been paying the less expensive insurance rate for years, could end up having no coverage when its need most- after a claim. So the insurance company ends up collecting insurance premiums for years and you think that you are getting away with something because you are successfully paying a discounted, and in some cases a very discounted rate. You think that you have valid coverage just because you paid the bill. Then when you have the accident and they find out you are actually living in a more expensive area and have not paid the appropriate rate, they start an investigation and they are very good at it. They start with what is called an “Examination Under Oath.” As part of your policy obligations, you are required to cooperate with your insurance company and this would require you to submit to an “Examination Under Oath” which is a question and answer session by an investigator or an attorney for the insurance company. They will review your residence history, EZ Pass records, voting records, bank records, credit card records and drivers license history. Then they will visit your neighbors and ask about your residency, how often they see you, how often they see your car and will make a determination as to where you actually live.
So once the insurance company determines that in their opinion, you have committed a material misrepresentation and fraudulently obtained, or maintained cheaper insurance coverage, they don’t usually merely send you a bill for the difference. No, they generally deny all No-fault benefits to you and your passengers, and all liability coverage for claims made against the policy by the driver, passenger, motorcyclist, bicyclist or pedestrian also involved in the accident who may make a claim against you for monetary compensation for their injuries. Why does this matter?
Well, the significance is that for you as the driver, and your passengers, often family members, the medical benefits of at least $50,000.00 per person may be denied, leaving you and them solely responsible for hundreds or likely thousands of dollars of medical bills which would have been otherwise paid by your insurer with no obligation to repay it ever. If you are, or your passenger is out of work as a result of the accident you/they may lose the benefit of reimbursement of lost earnings (in general, 80% of your lost earnings up to $2,000.00 per month, or more). Your UBER, LYFT, or taxi rides for medical treatment (up to $25.00 per day) would also now come out of your pocket rather than being reimbursed by the insurance company.
Additionally, your insurer may not pay any claims for personal injuries by the other parties in the accident, including any passengers in your car, even if they are family members. This may make you personally responsible for paying thousands and possibly hundreds of thousands of dollars to the other parties injured in the accident, not to mention that you would have to pay for your own attorney to represent you rather than having an attorney assigned to you and paid for by your insurance company. Further, even if there were no injuries, but there is damage to the other vehicle, you may be responsible for paying for the damage to the other vehicle which could also be thousands of dollars.
So, the bottom line is that its not a good idea to try to save a few dollars in the short run, at the risk of being personally liable in the long run. You might as well throw that money that you pay to an insurance company out the window if you are not being honest with them and paying the required rate. While you may be able to confirm with the DMV that you have automobile liability insurance as required by New York State, the insurance may prove to be useless when needed.
This should also serve as a caution to those who have good intentions. They take out a policy in one area and then move to a new area where the insurer charges more. You don’t know that you have to inform the broker or insurance company that you moved or you figure that you will just tell them the next time you renew the policy. You have good intentions, but this may be a violation of the policy. We all know that insurance companies are just a business, looking out for themselves and looking to pay out the least amount of money possible. Your honest, good intentions won’t get you anywhere. The insurer will look to cancel your benefits if at all possible once there is a claim.
So don’t wait to tell your insurer that you have moved. Perhaps you have moved to a place where insurance coverage is actually lower and you may get an adjustment and be entitled to a credit or a refund. But perhaps you will have to pay more, which can have an awful effect upon your budget- no one wants to pay more than they have to. However, there is nothing worse for me as an attorney than having to tell a client involved in an accident with devastating injuries that because they chose to save a few hundred dollars they are now personally responsible for medical bills which would have otherwise been paid by their automobile insurer and additionally, that they would not be compensated by their insurer for their lost earnings.
Its simple. Understand that if you are not honest with informing the insurance company where you live, or even if you honestly just fail to let them know, you may end up with no benefits and so the amount you actually paid was simply a waste of money and may put you in a financially devastating position. We always advise our clients to be honest with their insurance company, keep them apprised of any changes (like adding new drivers [another subject for another blog], new addresses, etc.) and to maintain the correct amount of insurance to not only protect themselves against claims by others, but to also protect yourself in case the other car has none, or insufficient insurance coverage to compensate you for your injuries. See our blog about uninsured and underinsured motorist coverage for a full discussion of this subject.
Remember that our firm has been representing injured persons since 1988 and our experience shows. We provide this information to you so that you won’t be stuck without the benefits you need if you ever call us for representation after an accident. If you have any questions, or need our assistance please call us at 516-741-5454 or fill out our form on our website, www.newyorkattorneyatlaw.com.