The likely motivation behind the address switching, on the rise in cities in New Jersey, Massachusetts, Connecticut, Wisconsin, New York, the District of Columbia, and Maryland, is the decrease in premiums -- sometimes as much as 20 percent -- that some consumers have found by claiming a “farm use” discount.
Auto insurance premiums in these states are among the highest across the nation.
The company that verifies policyholder data for insurance companies, Quality Planning Corporation, checked out the garaging address of 151,022 vehicles for which a farm use discount was claimed by its owner. Geo-coding techniques were then applied to determine the population density for each address. Of the insured vehicles that were checked, almost 8 percent (11,699 vehicles) were found in areas where, absolutely zero agriculture exists, according to a 2000 Census Survey.
"When we discovered that a Jaguar XJ6 was reported garaged at a five-acre farm in Brooklyn, we weren't sure who'd be more interested -- the DEA or the policyholder's insurance company," said Ted Harris, manager of research and development at Quality Planning Corp. "We also found a correlation between this practice and those states where auto insurance is expensive. This sort of fraud can cost insurance companies millions of dollars each year -- and unfortunately it's honest consumers who end up subsidizing the dishonest."