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Is Another Flood Gate Opened?
By: Jeremy A. Kosin

It is no secret that insurance fraud has been a cancer to insurance companies that write automobile policies in the State of New York. As a result of these questionable claims, insurance companies are forced to either pay extraordinary amounts for the injuries allegedly sustained in third party actions and then pay again for first-party benefits. The other option is to investigate these "accidents" and pay thousands of dollars in defending the inevitable lawsuits in both first and third party actions. At long last, many insurance companies have drawn the proverbial line in the sand and are fighting back against fraud.

However, on September 26, 2002 Governor Pataki signed a bill into law that enables a driver of an automobile to sue his/her spouse and collect third party benefits under joint automobile liability coverage. The law became effective May 14, 2003 and the insurance companies were required to inform the insured of the availability of this new coverage on all policies renewable after January 1, 2004. Surprisingly, the new law does not provide the insurance companies with the appropriate rates the insureds are to be charged for this coverage. Previously, one spouse could sue the other spouse for third party benefits for injuries sustained in an automobile accident; however, the insurance company did not provide coverage to the named insured spouse being sued. Now that will change under this new law. The insurance company must offer this coverage at an additional cost, and if the insured accepts this offer, then a new form of insurance fraud may be on the horizon.

The traditional fraudulent incident scheme typically involved multiple unrelated claimants in a car which often did not include the named insured. The claimants usually did not know the owner of the automobile. The claimants would frequently receive medical treatment at the same "medical mill." When a husband and wife were involved in an accident, more often than not, that accident did not raise any suspicion on the part of the insurance company, except for the occasions where there was an underwriting question.

Now with the passage of this new law, how difficult will it be for a husband and wife to "plan" an accident scheme wherein the couple agrees to be involved in a single car collision. Then the more challenging questions would be how long will it take the insurance companies to catch onto this scheme and how would the companies investigate these accidents? It is not difficult to imagine that a married couple would be able to concoct a story of where they were going and where they were coming from much easier than four people who do not know each other. Unfortunately, the insurance companies face a tough road ahead and will likely pay numerous claims before catching on and all honest insureds will once again be victimized by possible insurance fraud.

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