A proposed bill aimed at deterring out-of-state residents from wrongfully obtaining auto insurance in North Carolina has gained some traction in the General Assembly.

The "rate evasion" bill backed by the state Department of Insurance won the unanimous consent of the House Committee on Insurance on Thursday morning. That action pushes the bill to consideration by the entire House.

The bill, thought to be the first to tackle this issue, makes it a felony for out-of-state drivers to fake a North Carolina residence in order to receive lower insurance rates than they could obtain in their home state. It also requires insurance agents to take measures to verify the address of applicants.

Insurance Department spokeswoman Chrissy Pearson estimates that "thousands, if not tens of thousands" of drivers from states with high auto insurance rates -- principally New Jersey and New York -- have obtained insurance in North Carolina by supplying fake information. When those drivers have an accident in Asbury Park or Poughkeepsie, it affects the insurance premiums North Carolina drivers pay.

North Carolina's auto insurance rates are the fifth- or sixth-lowest in the nation, depending on how the rates are calculated.

The problem includes both "Mom and Pop" scofflaws and "runners" who bring in vans filled with undocumented workers from New York and New Jersey, said Al Koehler, director of investigations for the DOI.

Today, violators can be prosecuted for crimes such as mail fraud or wire fraud -- if they use the mail or the telephone in the act. But the House bill would simplify prosecution by making the act of deceptively obtaining auto insurance a felony, he said.

The Insurance Federation of North Carolina, which represents property and casualty insurers, would like to see details of the bill amended but supports its thrust, said Joe Stewart, the group's executive director.

"We definitely want to address this issue," Stewart said. "The industry thinks this is a big problem and wants to see something done.

"New Jersey premiums are higher for a reason," he continued. That is, North Carolina insurers aren't being adequately compensated when they get Tar Heel rates for New Jersey risk.

What the industry doesn't like is putting the onus on insurance agents to be the gatekeepers. "We've got to strike an appropriate balance ... as to what is appropriate and practical," Stewart said.

His organization would like to see proof-of-residence documents, such as a North Carolina driver's license, required to register a car with the Division of Motor Vehicles.

But Pearson sees the industry's stance as so much whining.

"We are very frustrated the insurance companies are punting on this one, or seem to be," she said before Thursday's vote. "At some point the agents have to do something. ... If it's as simple as checking a few extra documents, come on."

The bill calls for insurance agents to verify a person's address by obtaining "reliable proof," such as a pay stub or utility bill with the applicant's address, or a North Carolina driver's license. The agent also would be required to retain copies of the proof-of-address documents.

Rep. Bruce Goforth, a co-sponsor of the bill along with fellow Democrat Hugh Holliman of Lexington, views the insurance industry as an obstacle that must be overcome. Nevertheless, he rates the chances of the bill winning approval from the full House as excellent.

"I think it's a no-brainer," he said.

All bills must be approved by one chamber of the General Assembly by next week's "crossover deadline" in order to have any chance of passing during the current legislative session.

A similar bill has been introduced in the state Senate by Sen. Clark Jenkins, an Edgecombe County Democrat.