A new state law may mean higher car insurance rates for New Yorkers

A new state law may mean higher car insurance rates for New Yorkers, unless they decide to opt out.

Under a law that took effect Aug. 1, all car insurance providers in New York must begin adding supplemental spousal coverage to their plans. The coverage is added whenever a New York resident gets a new policy, renews with their existing coverage or makes even a small change to their coverage, like an address change or vehicle addition.

With supplemental spousal coverage on an insured person's plan, if the covered spouse is the driver during an accident where they are responsible, or any other kind of accident where the at-fault party has insufficient or no insurance, the spouse is entitled to whatever the policy bodily injury liability coverage is.

Supplemental spousal coverage has long been offered as an option on New York insurance policies, but the new law turns the coverage into an opt-out program, rather than an opt-in program.

The effect can mean hundreds of dollars a year in extra insurance fees, depending on insurance plans, coverage and driving history. And when it's applied, that means a spouse covered by the policy most likely can't sue their partner for compensation for the accident.

Assemblyman Steve Hawley, R-Batavia, who has run an insurance firm for most of his professional life, said he's categorically opposed to the new mandate, as are most other people in the insurance industry.

"There is absolutely nothing that shows this needed to become a government-funded mandate," he said Monday. "You always had it as an option, but now it's a mandate."

The way the bill is written, the extra coverage is applied to every single policy in the state, and the insured person has to specifically submit paperwork to their insurance company declining the coverage. Hawley said he had a client come in and work with his team on a car insurance renewal. Hawley said he looked through the paperwork, found the declaration page which listed supplemental spousal coverage at $29 per vehicle per year.

"I asked this person if their premium went up, they said a little but not much and it was alright," Hawley said. "That's the way it is here, people are so used to their rates going up, in New York, one of the most expensive states to insure a vehicle in, that they don't bat an eye when they see it."

Hawley said his client was single, wouldn't be able to benefit from spousal coverage at all, and looked for the page to decline the coverage.

"It was back on page 32, on the back of the page too, with no different color, no arrows, nothing to show that this was about brand new coverage that had just been added no questions asked," he said.

The state Department of Financial Services, which regulates insurance agencies in New York, offers a general declination form that customers can send to their insurance company to decline the coverage. Insurance companies have been encouraged to use the same form. It can be found online at wdt.me/NoSpousalCoverage.

Hawley also said the application of the coverage appears unclear in its current form. If a couple has only one vehicle but both spouses are insured, and one has declined the supplemental coverage, Hawley said it's not immediately clear how the coverage would apply. He said it's not clear if only one spouse needs the coverage active, or if both need it in place to take effect if both are listed as drivers of the vehicle involved in the accident.

"Nobody knows the answers to that," he said.

Sen. Neil D. Breslin, D-Albany, who chairs the Senate Insurance Committee and who carried the supplemental spousal coverage bill through the Senate in 2022 and supported its advancement this year, said that he feels it's the job of the insurance companies to make this coverage and its implications clear for its customers, but also doesn't want to see customers fall through the cracks and pay for coverage they have no chance at using.

"While this new law is scheduled to sunset in a few years, if changes do need to be made prior to that date to improve its implementation, I would certainly be willing to discuss them," Breslin said.

Hawley said he was glad to see his colleagues in the legislature's upper chamber are open to tweaking the law, and is working with north country Assemblyman Kenneth D. Blankenbush, R-Black River, on a bill that would change the application of the law and exempt single insured people from the coverage automatically, no declination form required. He said he is looking at if his proposed legislation needs to address the question of who needs to carry the supplemental coverage in a single-car, dual-insured home.

"The main thrust now is to exempt single people from having to opt-out," he said.

Blankenbush said in a statement Tuesday that he doesn't believe it's the state's role to prescribe specific insurance policies for its residents, and said he was concerned residents wouldn't notice the extra charge.

"It is simply common sense to allow the insured to choose the coverages they want on their policy, yet Albany Democrats are once again stepping into your personal lives for their own benefit," he said.