‘Rate Evaders’: Auto Insurance Address Fraud Soars Under Hochul’s Watch

The number of New York drivers who register their cars to false addresses — an all-too-common form of insurance fraud — has soared under Gov. Hochul to more than $50 million per year, with out-of-state plate scams more than doubling, according to the state’s own figures.

The result is higher insurance costs for honest drivers, and unsafe streets for all (which lead to higher insurance costs, too).

Experts call it “insurance rate evasion” — and you see it on every street in New York City.

“I’m surprised how many people I see that supposedly live in Texas on the Upper West Side,” joked “Gridlock” Sam Schwartz, a former New York City traffic commissioner and longtime Big Apple transportation analyst.

The state Department of Financial Services quantifies the fraud annually based on information provided by insurance companies, which track policyholders misrepresenting where they predominantly use and store their vehicles to get cheaper rates.

Insurers reported losing $50.2 million to rate evasion last year, up 20 percent from $38.9 million when Hochul took office in 2021, according to a Streetsblog review of data collected annually by DFS. And that’s just the amount insurers know of.

Most of that money, or $43.7 million, came from people giving wrong addresses within New York State – meaning they did most of their driving in one place while claiming their principal location in another. That was up from $36.4 million — also 20 percent — at the start of Hochul’s tenure.

But the real growth came in out-of-state evasion, where losses more than doubled from $2.6 million five years ago to $6.5 million last year, with the top phony addresses coming from Florida, Pennsylvania and New Jersey. Insurance revenue lost to out-of-state plates peaked at $8.2 million in 2024, according to the state data.

The number of insured people misrepresenting where they use their cars has remained relatively flat, growing from 17,238 in 2021 to 17,441 last year. But the cost of that rate evasion has surged, insurers told DFS.

Hochul has launched an all-out push to deregulate auto insurance — backed by Uber — which she claims will save car owners money by eroding the rights for crash victims to sue. The governor blames staged crashes for driving up premiums, but Streetsblog found such cases vanishingly rare.

She has only rarely mentioned address fraud, which raises premiums for people who follow the rules.

In her State of the State plan, Hochul said that the state will “seek to take action New York drivers illegally register their vehicles in other states, which artificially decreases their coverage and raises costs for law-abiding New York drivers,” but she has released few further details on this issue specifically.

That’s a mistake, Schwartz said. Besides increasing costs for law-abiding New Yorkers, rate evasion also deprives the state of revenues from local vehicle registration fees. Drivers with falsely registered plates are also far more likely to speed and park illegally, a recent investigation by the City Council found.

“It’s an opportunity for the state to collect more money and lower insurance costs,” said Schwartz. “Government needs to nip it in the bud.”

The rate evasion rise coincides with an increase in toll evasion, which more than doubled for pay-by-mail charges for the Metropolitan Transportation Authority since 2022, along with a surge in reckless driving during the early years of the Covid-19 pandemic. That also tracked with a surge in phony temp tags, which Streetsblog uncovered as a booming illegal market for fake temporary license plates in an award-winning investigation, which prompted several states to make it harder for car dealers to pull off that type of scam.

“Many people who were previously adhering to rules and regulations suddenly let that fall by the wayside and just joined the chorus of people who are scamming the government,” said Schwartz.  

Rate evasion is likely undercounted

New York state law requires drivers to register their cars in the Empire State within 30 days of becoming a resident. The Department of Financial Services’ Insurance Frauds Bureau is legally required to report on the number of New Yorkers misrepresenting the principal place where they kept or drove their vehicles to lower their premiums.

But the state’s data likely undercount the extent of the problem. An analysis published by Streetsblog late last year found nearly 21,000 individual out-of-state-plated vehicles received tickets in New York City alone — far more than the statewide numbers logged by DFS. (The agency declined to provide more details about how it comes up with these numbers.)

One study by insurance analytics company Verisk estimated that so-called garage fraud accounts for $3 billion in lost premiums per year, and found more than 10 percent of insurance policies had “verifiable garaging address defects.” That included no matches between reported addresses and cars, along with people listing check-cashing facilities and prisons as their locations.

That 10-percent rate for the 11.3 million vehicles registered in New York adds up to more than a million potentially phony addresses — nearly 70 times as many as the state logged last year.

The report called out “growing acceptance of insurance fraud” among consumers. Some insurance agents actually abet the behavior to lower premiums and keep commissions, the authors said.

“Agents looking to do their customers a favor and keep their business may participate, for example, by misrepresenting the agency’s address as the garaging location. The actual location, meanwhile, is subject to much greater loss experience and should be charged a higher rate,” the study’s authors wrote.

Why they do it

Insurance rates can vary greatly by ZIP code, even within the same city or state, an NPR pricing tool shows. For example, drivers can save thousands of dollars a year if they “garage” their car in East Hampton’s 11937 versus Downtown Brooklyn’s 11201.

Insurers provide the state with fraud prevention plans, but those are “confidential,” according to the state’s insurance law. A DFS spokesperson declined to share any of those plans directly and said the agency wouldn’t do so either via a Freedom of Information Law request.

A spokesperson for Hochul said that a state task force with law enforcement and state regulators meets regularly to “identify and implement real solutions” for garage fraud, adding that the governor will share more details soon.

“Garage fraud is not a victimless offense, it raises rates for every New Yorker who plays by the rules,” Sean Butler said in a statement. “We’ll have more to share on this task force’s work soon, but drivers who think they can get a sweet deal by committing this fraud should know: we’re coming for you.”

Streetsblog recently documented on video multiple out-of-state plates (plus lots of other fraud) on a single Brooklyn-to-Manhattan commute last week.