New Jersey legislators are considering a bill that would make it the second state to impose criminal penalties for staging an auto accident to perpetrate insurance fraud.
State Senate bill S2426 would make it a criminal offense for anyone staging an auto accident to collect on an insurance claim.
The bill, which was reported out of the Senate Law and Public Safety and Veteran's Affairs Committee on Tuesday, would impose penalties ranging from 18 months to 10 years in prison and fines from $10,000 to $150,000, or both depending on whether someone is injured or killed in commission of the crime.
Under the bill, sentencing for this crime, termed "vehicular collision fraud," could not have sentences run concurrent with any other convictions. It also addresses patterns of collision fraud where someone who commits two or more acts can be charged with the crime.
The bill's primary sponsor is Sen. Henry P. McNamara, R-Passaic and Bergen.
Richard Stokes, regional manager and counsel for the Property Casualty Insurers Association of America in New Jersey, told National Underwriter that the intent of the law is unique and not common in other states except Florida.
He said this type of legislation is important to help drive down the cost of insurance. Similar measures can also spread to other lines of insurance in the future.
"It is critical that New Jersey remain a leader in fighting insurance fraud," he said.
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