Money in Your Pockets: Governor Hochul Proposes Measures to Bring Down Crushingly Expensive Auto Insurance Rates

Governor Kathy Hochul today announced a series of common sense reforms to bring down auto insurance rates and take action against bad actors whose fraudulent claims drive up costs for hardworking New Yorkers as part of her 2026 State of the State. The new proposals include a whole-of-government approach to crack down on auto insurance fraud. These proposals build on Governor Hochul's efforts to make New York more affordable and put money back into the pockets of hardworking New Yorkers.

"Car insurance rates are just too damn high, especially at a time when families are feeling squeezed by the cost of living," Governor Hochul said. "High car insurance rates don't just impact drivers, they impact all New Yorkers when businesses pass on increased costs to customers. These reforms will crack down on fraud, help drive costs down and put money back in the pockets of hardworking New Yorkers."

New Yorkers pay some of the highest car insurance rates in the nation - totaling just over $4,000 annually on average, nearly $1,500 above the national average. Car insurance rates are driven up by a combination of fraud, litigation, legal loopholes, and enforcement gaps, with staged crashes and associated insurance fraud inflating everyone's premiums by as much as $300 per year on average according to some estimates.

Cracking Down on Fraud To Lower Rates for Everyday New Yorkers

Fraud is a major driver of elevated auto insurance premiums. Increasingly sophisticated actors stage elaborate accidents, designed to allow for "jackpot" payouts from insurance companies or jury awards. These schemes imperil the safety of honest drivers, cause property damage, and increase rates for drivers across the state. Increasingly, scams go beyond just one bad actor at the wheel and are orchestrated by organized criminal conspiracies.

Unfortunately, these scams are becoming more prevalent. In 2023, there were 1,729 staged crashes in New York State, which ranks second highest in the nation for incidents of staged fraud. In total, insurance carriers reported 38,270 incidents of suspected motor vehicle insurance fraud to the New York State Department of Financial Services (DFS) Insurance Frauds Bureau in 2023 - a record high. According to the Insurance Information Institute, staged crashes and associated insurance fraud inflate everyone's premiums by as much as $300 per year on average.

To combat these organized criminal efforts, Governor Hochul is taking a whole-of-government approach to cracking down on auto insurance fraud. The Governor will reinvigorate the State's Motor Vehicle Theft and Insurance Fraud Prevention Board, empowering it to redouble its efforts toward zealously investigating and prosecuting insurance fraud across the state. This will include directly tasking DFS, DMV, DCJS, and NYSP with a more proactive and coordinated approach to enforcement, including dedicated resources and staff at both DFS and NYSP focused on auto insurance, and ensuring coordination in law enforcement response.

As the State investigates and builds cases against scammers and fraudsters, the Governor will ensure her agencies are partnering with prosecutors statewide to ensure crimes are not going unpunished. To equip prosecutors with the tools they need to shut down organized crime rings, Governor Hochul will offer legislation to ensure prosecutors can seek criminal penalties against any individual responsible for organizing a staged accident, not just the particular individual behind the wheel. Working hand in hand with District Attorneys across New York, the State will seek to help build cases that put an end to the organized fraud that's robbing New Yorkers via elevated insurance rates.

Governor Hochul will also advance additional efforts to take on medical providers who participate in fraud by signing off on phony medical diagnoses that result in enormous payouts, increasing the probability that these white-collar crimes will lead to temporary or permanent loss of licensure for the providers who commit them.

State agencies will also seek to take action when New York drivers illegally register their vehicles in other states, which artificially decreases their coverage and raises costs for law-abiding New York drivers.

Strengthening Insurer Anti-Fraud Programs

Insurance companies must play a central role in tackling fraudulent behavior that targets their policyholders. However, current law handcuffs insurers' ability to protect their law-abiding customers against fraud and abuse by capping the time they have to identify, investigate, and report instances of fraud to just 30 days.
To ensure fraud is being identified and punished, the Governor will increase the timeframe insurers have to report fraud and reduce barriers to alleging fraud in court, giving insurers more time to investigate claims and avoid paying fraudulent ones. Legislation will balance increased flexibility to crack down on fraud with the need to preserve crucial consumer protections, such as allowing policy-holders to collect 2 percent interest on any payment insurers hold back as an incentive to ensure insurers continue to move quickly on evaluating genuine claims.

Limiting Damages for Individuals Engaging in Unlawful Behavior at the Time of an Accident

When drivers are engaging in unlawful behavior at the time of an incident, they shouldn't be able to win sizable insurance payouts. However, current law permits individuals committing crimes, including impaired driving, to receive generous payouts - including for pain and suffering and emotional distress - which are paid from the premiums contributed by law-abiding drivers.

Governor Hochul will cap the payout on these types of non-economic damages for drivers engaging in criminal behavior at the time of the incident. Specific crimes that would warrant the capping of damages include:

• Uninsured motorists, who have violated state financial responsibility laws, contributing to additional cost in the insurance market;

• Individuals convicted of driving while impaired at the time of the incident; and

• Individuals committing a felony (or fleeing one) at the time of an incident.

Limiting Damages for Individuals Who Are "Mostly" At Fault in Causing an Accident

New York is in a minority of states that allow drivers that are deemed "mostly" at fault in an accident to still collect extensive damages, including non-economic damages mentioned above. This means that in New York, even the driver deemed mostly at fault for an accident can walk away with a sizable payout for that accident.

Most states - including Colorado, Connecticut, Delaware, Massachusetts and New Jersey - however, have common-sense rules which only permit recovery of damages if a plaintiff is not primarily at fault for the accident. Governor Hochul will seek changes to New York's laws that will limit the non-economic damages a driver can obtain if they are mostly at fault for an accident, introducing a measure of accountability for who is compensated by insurance after an incident.

Tightening the Serious Injury Threshold

New York's no-fault insurance law allows for individuals injured in an auto accident to make claims for compensation that stretches beyond reimbursement for the medical expenses or lost wages associated with an injury. This additional compensation is intended to offer support for the pain and suffering of victims with serious injuries. The "serious injury" threshold is intended to screen out minor injuries from personal injury litigation in keeping with the original intent of the no-fault law to reserve litigation only for auto accidents causing serious harm.

However, New York's legal definition of serious injury is vague, applied inconsistently, and can include temporary injuries that only sideline an individual for a short time following an accident rather than the more significant injuries that would merit further payouts. Without a fair and firm definition of serious injuries, individuals without significant harms may try to game the system to win astronomically high "jackpot" awards from courts associated with these harms-raising rates for everyone else.

The Governor will reform the serious injury threshold by proposing objective and fair medical standards for what actually qualifies as a serious injury. This will create clear and objective criteria for what constitutes a serious injury, avoid unnecessary and expensive litigation, and will help stop instances where individuals are attempting to exploit a system to attempt to win payouts that are not aligned with the severity of their injuries and push everyone else's rates up.

Ensuring Consumers, Not Insurance Companies, Benefit From Savings

Since the 1970s, DFS has maintained the Excess Profit Law as a critical consumer protection against auto insurers making excess profits on the backs of consumers. This law acts as a "circuit breaker" by requiring auto insurers to return any profit exceeding a certain threshold directly to policyholders. While carriers have recently operated at a net loss, reforms to the auto insurance law as proposed above would be expected to generate significant operational savings for the industry. To ensure that savings as a result of the Governor's proposals are passed on to New Yorker policyholders as appropriate, if these reforms are enacted, Governor Hochul will direct DFS to re-examine the Excess Profit Law and in particular the current threshold trigger, ensuring consumers are prioritized.

Increasing Transparency For Policyholders in the Auto Insurance Market

Too often, auto insurance rates for policyholders rise without explanation, or relation to any identifiable change in context. In a time of high rates, New Yorkers deserve to understand when and why their insurance premiums go up. The Governor will increase transparency by requiring insurers to notify policyholders about rate changes, explain why the changes are happening, and offer additional context upon written request.

Improving Incentives To Drive Safely

While guarding against bad actors gaming the system, insurance companies should also seek opportunities to reward drivers who play by the rules and keep themselves and others safe. Governor Hochul will seek to reduce insurance costs by enlisting drivers as partners in her efforts to make our roads safer, leveraging technology to reduce insurance rates.

Governor Hochul will require insurance companies to offer discounts on insurance rates when drivers opt into programs that have been shown to reduce the incidents of unsafe and expensive accidents. Under the Governor's proposed reforms, New York drivers who opt into programs which utilize devices, cameras, or smartphone apps to monitor driving behavior will be eligible for discounted personalized rates, with safer drivers offered lower premiums.

This initiative will help put safer drivers on the road while lowering premiums across the board.

Contact the Governor's Press Office