Posted at: 02/03/2014 7:06 AM
Updated at: 02/03/2014 8:43 PM
By: Janet Lomax
If you pay car insurance in New York, there is a fee you pay as well, one that is bringing in millions of dollars to the state. It is called the Motor Vehicle Law Enforcement Fee and it has been on the books since 1992.
But we found a lot of people aren't aware of it. We also found out some of the money isn't being according to the intent of the law. In this New York State Exposed report, we're hearing from some lawmakers who think it's time to reel that fee back in.
Tiffany Britt admits she's seen the fee it on her car insurance renewal bill but she didn't pay any attention to it. “I just assumed it was another fee we had to pay. I wasn’t too happy because it’s already a high rate but I just paid it because it’s part of New York State. You have to do it."
The Motor Vehicle Law Enforcement Fee is on your car insurance renewal policy .It's $10 a year per car. If you purchase insurance, you're helping to fill the pot.
When you register your car you have to show proof of insurance. In 2012 there were 9.1-million standard series vehicle registrations on file in the state. In Monroe County there were close to 475,000. Statewide, this fee brought in $115-million for 2012-2013 according to the State Department of Budget.
You may not be aware of the fee but every insurance company doing business in the state is. We went to see Deborah Whitt, a State Farm insurance agent with more than 30 years of experience. “It’s a $10 annual fee that's charged per vehicle by the state of New York and the insurance companies collect that fee on behalf of the state."
She says some of her customers are aware of it and question it but when we asked if they're ok with it, Whitt chuckled. "Well, people do ask where the money goes. People always ask where does that money go?"
We took that question to State Senator Ted O'Brien. He is a member of the New York State Insurance Committee. “It's not all bad, in that a large part of that fee is dedicated to go towards law enforcement. Both local District Attorneys can get grants and local Law Enforcement can get grants from the Division of Criminal Justice Services to crack down on insurance fraud which is costing the insurance companies and then ultimately the policy holders hundreds of millions of dollars a year. And part of that fee also goes to the State Police for their Auto Theft Unit and also to crack down on Auto Insurance Fraud which has been a big problem in New York."
We got the breakdown from the State Department of Budget. Of the $115.4-million in revenue from the Motor Vehicle Law Enforcement Fee in 2012-2013, $4.7-million goes to the Department of Criminal Justice Services for local auto theft and insurance fraud prevention programs. DOB says the remainder, $110.7-million goes for "state police costs." DOB says, “Nine point one million of that must be used by State Police for its own Auto Theft and Insurance Fraud Prevention Activities."
But some are asking if State Police gets $110-million and only has to use $9-million for those specific programs, how is the other $100-million used?
We emailed New York State Police. Spokesperson Darcy Wells said, “All of those funds, anything left over goes to our Highway Safety and Public Security...back to State Police." We asked Wells to be more specific and she referred us back to DOB.
Some State lawmakers think it's time to take another look at the fee, not only how it's being used but the price of the fee as well.
When it first became law more than two decades ago, it was a dollar a car. It's gone up now to $10 a vehicle.
State Senator Jim Seward who chairs the State Senate Insurance Committee has been quoted as saying, “It's a good policy that's run amok."
His colleague on the committee, Senator O'Brien agrees. “I think what he is saying, and I would tend to agree is that the charge has gotten larger than it needs to be to focus our law enforcement activities on really cracking down on auto insurance fraud. I think what needs to happen is a reduction in the amount of the fee so that insurance policy owners aren't charged as much and the money that is collected is only used to fight auto theft and insurance fraud. That's what it's originally designed to do. We've strayed a little beyond that and I think it's time to reel it back in."
O'Brien says he will work with his colleagues to ensure that the appropriate amount is being collected. Critically we cannot endanger our fight against insurance fraud, crimes that cost the people of this state hundreds of millions of dollars each year. The Insurance Committee needs to work towards finding the balance between cost to consumers and supporting the state's vital fraud-fighting efforts."