Governor Kathy Hochul announces reforms to bring down costs of auto insurance rates and tackle fraudulent claims across New York State as part of her FY27 Enacted Budget.
New York State has passed reforms to bring down costs of auto insurance rates and tackle fraudulent claims across New York State as part the State Budget.
Governor Kathy Hochul said 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.
The 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. 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 percent 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 percent reduction in the average rates by 2025, showcasing savings for consumers.
The reforms on auto insurance are as follow:
– It 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.
– It 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.
– It also 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.
– It 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.
– It protects consumers by prohibiting insurance companies from setting rates based on extraneous, personal factors like homeownership status, occupation, education level or zip code.
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