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Beep Blasts High Insurance Rates

When it comes to auto costs, Brooklynites are being dealt a double whammy, according the borough president. Not only are some of the largest car rental agencies charging Brooklynites more for renting cars than other boroughs, but the borough president also fears that some auto insurance companies are illegally refusing to lend to residents in certain Brooklyn neighborhoods. And until Brooklyn Borough President Marty Markowitz won a lawsuit in New York Supreme Court earlier this month, the New York State Department of Insurance – backed by the industry – wasn’t giving up the information that might prove his theory right or wrong. Spokespeople in the industry say their practices and actions are fair. Among the car rental agencies singled out for criticism are Dollar and Hertz, who Markowitz alleges routinely charge Brooklyn residents hundreds of dollars more per week to rent a car than they charge residents of Manhattan. Quotes for a one-week rental for a mid-size car provided to this newspaper varied between $226 and $823 for rental including tax and insurance. Of four companies asked, Hertz and Dollar asked for the zip code on the driver’s license. For a one-week rental, Hertz quoted $193 less for a driver’s license with a Manhattan address than for a Brooklyn address. Dollar quoted $377 less when a Manhattan zip code was given, than when a Brooklyn zip was given. Neither Budget nor Avis representatives asked for the driver’s zip code before providing a quote. When asked, representatives said that the driver’s address did not make a difference to the quote, and they only required that the drivers be 25 years or over and have a major credit card for the quotes to be valid. None of the four agencies contacted had a car rental office in Brooklyn. Drivers were referred to a major airport such as JFK or several offices in Manhattan. In the past, car rental agencies justified charging higher rates because New York State’s vicarious liability law allowed victims to sue companies for accidents caused by renters. The law was repealed last year following a federal law passed by Congress, but not all rental companies have dropped their rental rates accordingly, said Markowitz. “Now that the state’s liability law is no longer in effect, continuing these charges is just plain price gouging,” Markowitz said. “It is outrageous to penalize 2.6 million Brooklynites, regardless of their driving record, because a tiny percentage may have caused accidents or stolen cars.” The city and the state tried to challenge the practice in courts but were defeated. Richard Broome, Vice-President of Corporate Affairs for Hertz, said that the rate structure has not changed since 1992. He said that higher charges in Brooklyn, the Bronx and to a lesser extent in Queens directly resulted from a detailed analysis showing significantly higher rates of vehicle damage, cost of repair and legal costs in those boroughs. “Those costs in those boroughs are much higher than other places in the United States,” Broome said. Broome said that if the car were hired in Brooklyn, victims involved in out-of-state accidents would frequently sue rental companies in Kings County, where litigation costs are much higher. “We thought it is fair to put the burden of the costs in those areas that were causing the problem,” Broome said. Although insurance is meant to cover accidents, liability lawyers would seek more compensation than insurance companies were prepared to pay. Not all drivers are adequately insured. They turned to the rental companies, Broome said. “The question is, who has deepest pockets,” said Broome. “With vicarious law, we are the ones that have the deepest pockets.” Broome said that Hertz have not removed the fees because the federal law is being challenged in Florida. If this suit is successful, the law could be reinstated in New York, he said. Accidents happening now could then come under the vicarious liability law, he said. “We are hoping that the federal law will be upheld, but can’t be sure that the vicarious liability law, which we have had to live with for years, won’t be reinstated,” said Broome. “We know customers in boroughs are not happy, and we can’t blame them,” he said. “We hope the courts will resolve this quickly so we can take quick action.” Broome said the company would drop their rates once the matter was settled in the courts. But Regina Weiss, spokesperson from the borough president’s office, described this as a “poor excuse,” saying that pending the result of the Florida challenge the federal law is in affect. Asked why Hertz does not have a rental outlet in Brooklyn, Broome said Hertz has 13 locations in Manhattan and at the airports. “That is where the vast majority of our local business is,” he said. “We are constantly looking at different locations,” he said. But if the borough president is frustrated with the car rental industry, his office may have cleared a major hurdle in trying to investigate allegations by brokers that the auto insurance industry is redlining some Brooklyn neighborhoods. The Supreme Court ruled recently that the NYS Department of Insurance can’t withhold data it has collected showing the zip codes of insurance company customers. Markowitz had sued the Insurance Department because it had refused to release data under the Freedom of Information Law, arguing that the information was privileged trade secrets and they are entitled to an exception. Markowitz wanted to investigate testimony he had received in 2003 by brokers who alleged there was a pattern of redlining in Brooklyn’s low-income communities by some car insurance companies. “It is not only illegal, it is also immoral for an insurer to refuse to issue a policies based solely on where someone lives,” Markowitz said in a statement. “Now we will be able to see whether, if in fact, this practice is going on in Brooklyn.” In a 2003 hearing, insurance brokers in neighborhoods, including Flatbush, East Flatbush and Sunset Park, testified that they could no longer write auto insurance policies from major insurers for their local clients. In their ruling this month, the Supreme Court of the State of New York in Manhattan determined that the department had failed “to fulfill its burden” in proving exemption from Freedom of Information Law. “The Agency determination that such reports can be kept confidential for six years would result in the public not being able to access these records until long after they are relevant to current insurance practices,” Justice Doris Ling-Cohan ruled in her Jan. 9 decision. The judge ordered the information to be released after the formal notice of the ruling had elapsed. “If the insurers are not breaking the law, they have nothing to worry about, said Markowitz. “However, it does look suspicious that some of the nation’s biggest insurers joined the state in this lawsuit, in an attempt to keep the information from getting out.” Chubb and Son, Farmers New Century Insurance Company, State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Insurance Company all intervened in the lawsuit on the state Insurance Department’s behalf. Calls to all but one of the insurance companies were not returned in time for publication. Farmers Insurance, however, referred the call to the Insurance Information Institute, who did not return the calls in time for publication. “We were disappointed in the verdict, and we haven’t decided whether or we are going to appeal,” said Wayne Cotter, a spokesperson for the State of New York Insurance Department.

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