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  • Dean Smith

New Jersey Considers Bill Targeting Drivers Participating in “Phantom Garaging”

We’re talking about rate evaders, and they’re everywhere. As we all know, rate evaders register their vehicles in another state for the purpose of lowering their auto insurance rates, while they live and operate their vehicles in areas with relatively higher premiums. The difference in premium costs according to the geographic area could range anywhere from a couple hundred bucks to actually DOUBLING the rate.Patricia L Harman of gives a clear example: “For instance, a driver living in Long Beach, N.Y., would pay an average of $2,269 according to’s rate calculator. If he says he lives in Toms River, N.J., he can almost cut his rate in half where the average would be $1,169.”What about areas within much closer proximity, as in on or around state borders? Harman notes, “For a closer comparison, drivers living in Attleboro, Mass., which is only about eight miles away from Pawtucket, R.I., would pay half as much for their insurance using the same rate calculations, $1,113 versus $2,290.”This is where the term “phantom garaging” comes from. Drivers tell their insurance companies that their vehicles are garaged in another state entirely.It seems obvious the rate evader trend is on the rise, and current fraud laws in New Jersey aren’t much of a deterrent, as rate evaders are not prosecuted. However, the state is considering bringing the hammer down with a bill that will stiffen consequences and help fight this crime.According to Propertycasualty360, “Howard Goldblatt, director of government affairs for the Coalition Against Insurance Fraud, testified before the Senate Commerce Committee this week in favor of A2281/S 1727, telling legislators that ‘passage would send a strong message in New Jersey and throughout the nation that insurance fraud of any kind should not be tolerated.’”Goldblatt explained that point-of-sale fraud is a growing concern in New Jersey and other states. “It is not unusual to drive through congested areas seeing autos with out-of-state license plates on the road, parked by homes and in driveways,” he told the committee.If the bill passes, motor vehicle fraud will become a second-, third- or fourth-degree offense, which then gives the Attorney General authority to develop insurance fraud prosecution guidelines. These guidelines would then be disseminated to all county prosecutors within 180 days of the law’s effective date.Source

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