Attempt to Save Premium is Costly to Insured 

Living in New Jersey but Insured in Florida is Fraud

No one like to pay insurance premiums. However, in a state like New Jersey, insuring a vehicle with No Fault insurance is mandatory. Since insurance in Florida is less expensive than in New Jersey a resident of New Jersey was tempted to and, in fact, insured his vehicle in Florida to save money on premium charges.

In Jeffrey E. Scholes v. Stephen M. Hausmann, And Kimberly A. Logan, Docket NO. A-0980-17T3, Superior Court Of New Jersey Appellate Division (October 16, 2018) the plaintiff appealed from an order granting summary judgment to defendant Stephen M. Hausmann (“defendant”) and dismissing the complaint based on the court’s finding that plaintiff was uninsured within the meaning of N.J.S.A. 39:A-4.5(a), and thereby barred from recovering damages for economic and non-economic losses.

FACTS

On October 23, 2014, plaintiff and defendant were involved in an automobile accident in South Orange and plaintiff suffered injuries. The vehicle he was driving was titled and registered in his name using a friend’s address in Florida, despite plaintiff living and working in New Jersey for approximately five years. He failed to obtain a New Jersey driver’s license or to register his vehicle in New Jersey.

Plaintiff acknowledged that his vehicle was principally garaged in New Jersey. The judge found that plaintiff “provided false information to the State of Florida as to his residency.” At his deposition, plaintiff testified he continued to maintain his “Florida automobile insurance because . . . Florida insurance was less expensive than new jersey insurance.” (emphasis added)

As a result of his injuries, plaintiff applied for personal injury protection (“PIP”) benefits through his Florida Geico automobile insurance policy. The Florida policy was not approved by the New Jersey Commissioner of Banking and Insurance, and it only provided $10,000 per person in medical benefits coverage.

Defendant moved for summary judgment, arguing N.J.S.A. 39:6A-4.5(a) barred plaintiff’s claims because the Commissioner did not approve his insurance policy and therefore, he was uninsured under the statute. Based upon plaintiff’s misrepresentations, defendant also argued that insurance fraud was committed pursuant to N.J.S.A. 2C:21-54.6, which was enacted to prevent reverse rate evasion.

DISCUSSION

Every owner of an automobile principally garaged in New Jersey must maintain automobile liability insurance coverage under provisions approved by the Commissioner, including mandatory medical expense benefits coverage of $15,000 per person. New Jersey statutes state that all owners of motor vehicles registered or principally garaged in New Jersey are required to maintain minimum amounts of standard, basic, or special liability insurance coverage for bodily injury, death, and property damage caused by their vehicles; that because an out-of-state insured vehicle was principally garaged in New Jersey, the owner must maintain PIP coverage; any person who, at the time of an automobile accident resulting in injuries to that person, is required but fails to maintain medical expense benefits coverage mandated by the statute shall have no cause of action for recovery of economic or noneconomic loss sustained as a result of an accident while operating an uninsured automobile.

The Legislature adopted the statute to limit the ability of persons injured in motor vehicle accidents to sue persons responsible for their injuries. The statute advances a policy of cost containment by ensuring that an injured, uninsured driver does not draw on the pool of accident-victim insurance funds to which he did not contribute. The statutes limit a plaintiff’s ability to sue when he or she has not complied with the compulsory insurance law and gives the uninsured driver a very powerful incentive to comply with the compulsory insurance laws: obtain automobile liability insurance coverage or lose the right to maintain a suit for both economic and [non-economic] injuries.

In order to find that plaintiff was required to maintain New Jersey medical expense benefits coverage, it must be established that his vehicle was principally garaged in New Jersey. To determine where an automobile is principally garaged, the pivotal factor is where the vehicle is primarily or chiefly kept or kept most of the time not where the owner intends to reside.

Since plaintiff primarily garaged his vehicle in New Jersey, he was required to maintain automobile liability insurance coverage under provisions approved by the Commissioner, including mandatory medical expense benefits coverage of $15,000 per person. As noted by the judge, the Deemer Statute cannot save the plaintiff’s failure to obtain an insurance policy approved by the State of New Jersey.

The court found no ambiguity in the statute that would offend plaintiff’s procedural due process rights. As recognized by the motion judge, implicit in the goal of the statute is that New Jersey residents, and those who principally garage their automobile in this state, are required to maintain automobile insurance coverage approved by the Commissioner of Banking and Insurance.

ZALMA OPINION

By not insuring the vehicle with New Jersey insurance because it was cheaper to be insured as a Florida resident the Plaintiff committed insurance fraud and was unable to receive any benefits as a result of the accident. He was lucky he was not charged with a crime and sentenced to jail.