NJ officials suspect luxury cars were driven into storm-flooded parking lot on purpose, possibly for insurance cash. Who pays?

Unfortunately for those behind the alleged scheme, much of the incident was caught on video, with various clips circulating social media before making it into the hands of officials.

“We have video documentation of vehicles that were coming here purposefully driving into the flooded area. Those are all being investigated by the police department,” the borough’s administrator, Greg Franz, told local news outlet PIX11.

In an email to Moneywise, Franz further explained that “as we were monitoring the area throughout the weekend, cars would appear, also documented by social media posts.”

While he said there are “no victims of a crime to investigate,” he did mention that the New Jersey Attorney General’s fraud unit, as well as the New Jersey Department of Banking and Insurance, have also been made aware of the footage.

Car insurance in NJ is going up — as is insurance fraud

New Jersey now has some of the most exorbitant auto insurance rates in the country, and providers continue to hike them higher. Since 2022, customers have seen dozens of double-digit increases — but not without cause.

As the director of the state’s Department of Rate Counsel told the New Jersey Monitor about rate changes this spring, “unfortunately, in many instances, the math does support an increase, many times a significant increase.”

Inflated claims, lengthy litigation and fraud are some of the key reasons why insurance companies turn to raising rates across the board in an effort to compensate for pricier payouts.

And this investigation in Edgewater could very well be a case of fraud.

So, who pays? Experts say it depends

Aldo Bermudez of the Bermudez Agency at Goosehead Insurance says drivers intentionally destroying their vehicles could be trying to get out of their loan or lease.

“If people are doing this to their own cars, they are probably trying to get out of paying to have the insurance company declare the vehicle a total loss,” he tells Moneywise. As for who will have to pay for the cars, well, that will depend on the outcome of the investigation, and also what kind of coverage the titleholders have.

Those vehicles that were truly parked in the lot before the flood began should be covered by insurance, minus a deductible — but only if they are under a comprehensive policy, which most new rides must have, as basic coverage doesn’t extend to physical damage.

On the other hand, if it can be proven that vehicles were pushed or driven into the floodwaters, the owner/operators will receive no payout and will likely face criminal and/or civil insurance fraud charges.

John Espenschied, proprietor of Insurance Brokers Group, says it all comes down to intent and what can be proven with hard evidence.