Hochul secures reforms to lower auto insurance premiums for New Yorkers

Submitted by the Office of Gov. Kathy Hochul

Gov. Kathy Hochul announced reforms to bring down costs of auto insurance rates and tackle fraudulent claims across New York as part of her FY27 enacted budget. The governor secured common-sense steps to battle fraud, limit damages paid out to bad actors and ensure that consumers, not insurance companies, are prioritized. These reforms build on Hochul's ongoing efforts to make the state more affordable and put money back into the pockets of hardworking New Yorkers.

"Outdated laws, special interest loopholes and jackpot insurance payouts to bad actors have long forced New Yorkers to pay some of the highest car insurance rates in the nation," Hochul said. "These hard-fought reforms are a win for every New Yorker who depends on a car to go to work or drop their kids at school. But it's bigger than that – I've heard from farmers who say these reforms will lower the cost of getting their goods to market and from construction supply companies who say this will lower the cost of building. This is how we are delivering on the promise to tackle the affordability crisis head on."

New Yorkers' insurance rates total an average of slightly more than $4,000 annually, nearly $1,500 above the national average. Car insurance rates are driven up by a combination of fraud, litigation, legal loopholes and enforcement gaps. Staged crashes and associated insurance fraud inflate premiums up to $300 a year, according to some estimates. New York's broken insurance system is not just hurting those who rely on a car to get around, but local businesses that rely on trucking to make ends meet.

The FY27 enacted budget includes sweeping reforms designed to help drive down New York's exorbitantly high auto insurance rates, addressing the root causes by targeting fraud and tackling runaway litigation. No other governor in a generation has taken on tort reform and walked away with a deal that will result in significant savings for New York consumers and businesses. The budget also includes provisions that enable prosecutors to seek criminal penalties against any individual responsible for organizing a staged accident, not just the particular individual behind the wheel.

The state of Florida's Office of Insurance Regulation has issued an analysis demonstrating how its 2023 tort reform package has resulted in a 5.6% decrease in the average auto insurance rates across the majority of its market. For example, in 2025, Florida's largest carrier returned nearly $1 billion in excess profits to 2.7 million policyholders. Florida's analysis of its declining rates offers a stark contrast with New York's experience in the same timeframe. Following the implementation of tort reform, Florida reversed its double-digit growth of auto insurance rates in 2023 into a 7.4% reduction in the average rates by 2025, showcasing savings for consumers.

Limiting damages for individuals engaging in unlawful behavior at time of accident

Hochul's measure caps damages for drivers engaging in criminal behavior at the time of the incident, to ensure drivers flouting the law – including uninsured motorists, drunk drivers, and drivers in the act of committing a felony – don't walk away with a jackpot payday at the expense of everyone else.

Tightening serious injury threshold

Improves statutory definitions to clarify what actually constitutes a "serious injury" so that damages for pain and suffering or emotional distress are reserved for those able to objectively demonstrate that they have suffered a serious injury.

Limiting damages for individuals who are 'mostly' at fault in causing an accident

Ensures that if a driver is found to be mostly at fault for causing an accident, they cannot sue their victims for outsized payments for damages. This change will put New York in line with most other states.

Applying stringent oversight on insurance companies rates, preventing excess profits, returning savings to consumers

Puts consumers first by preventing insurance companies from exorbitantly raising rates by setting a legal threshold that prevents excess profits and returns savings to consumers. Additionally, the budget creates new regulatory safeguards to prevent insurance companies from raising rates without seeking express approval from the Department of Financial Services.

Ensuring fair rates for drivers

Protects consumers by prohibiting insurance companies from setting rates based on extraneous, personal factors like homeownership status, occupation, education level or ZIP code.