Out-of-State Drivers Flock to N.C. to Obtain Cheaper Tags, Insurance

Raleigh, N.C. — People come from other states to take advantage of North Carolina’s deals on car insurance. Now, state officials are trying to stop fraud that costs every driver in the state.

Most license tags found in downtown Raleigh are North Carolina-issued. However, state insurance investigators are growing increasingly frustrated because more and more Tar Heel state tags are showing up illegally in northern states.

“Now, that's a problem because they don't actually live here,” said Chrissy Pearson with the state Department of Insurance. “They're paying much cheaper rates then they should be paying, and they go back up to New Jersey and have an accident and we're all ending up paying for it.”

Pearson said motorists flock to North Carolina from the most expensive car insurance states like New Jersey and New York. They give agents fake local addresses, get their insurance and tags and head back to their real homes up north.

“It could adversely affect all of us,” said Ray Evans, general manager of the North Carolina Rate Bureau. “If the differential is high enough, people will drive a long distance, I'm sure, to get any kind of goods more cheaply.”

Another concern is illegal immigrants. Investigators said they suspect van loads are coming into the state.

“They bring them down to an agent's office and they all buy insurance on the same day,” Pearson said. “Those are cases where we believe insurance agents themselves may be implicated.”

With insurance in hand, illegal immigrants could use other fraudulent documents to get drivers licenses.

Whether it's in residency or rates, regulators want lawmakers to close the loopholes.

“(We want this done) so that we can actually prosecute them and give them some hard time and some stiff penalties for this type of fraud,” Pearson said.