Money In Your Pockets: Governor Hochul Highlights Proposals to Bring Down Costs of Vehicle Insurance Rates and Tackle Fraudulent Claims

Governor Kathy Hochul today highlighted her proposals to bring down costs of vehicle insurance rates and tackle fraudulent claims across New York State. The Governor is taking common-sense steps to battle fraud, limit damages paid out to bad actors and ensure that consumers, not insurance companies, are prioritized. These proposals build on Governor Hochul's ongoing efforts to make the state more affordable and put money back into the pockets of hardworking New Yorkers.

"Since taking office, my top priorities have been to make New York more affordable and protect New Yorkers - and that's why I proposed measures to bring down auto insurance costs and battle fraudulent claims that are driving up costs for everyone," Governor Hochul said. "These common-sense proposals will not only increase auto insurance transparency for New Yorkers, but they will also put money back into people's pockets, especially during a time when the cost of living is just too high."

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

Increasingly sophisticated actors stage elaborate accidents, designed to allow for "jackpot" payouts from insurance companies or jury awards, and 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. This is up from 24,238 incidents of suspected motor vehicle insurance fraud from 2020, a 58% increase in three years. 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, including:

- Reinvigorating the State's Motor Vehicle Theft and Insurance Fraud Prevention Board, empowering it to better support the ability to investigate and prosecute insurance fraud across the state

- 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

- Partnering with District Attorneys across New York to help build cases that put an end to the organized fraud that's robbing New Yorkers via elevated insurance rates

- Strengthening efforts to take on medical providers who participate in fraud by signing off on phony medical diagnoses that result in enormous payouts

- Taking 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

Current law handcuffs insurers' ability to protect their law-abiding customers against fraud and abuse by capping the time they have to identify and report instances of fraud to just 30 days. To ensure fraud is being identified and punished, Governor Hochul 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.

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 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, including uninsured motorists, individuals convicted of driving while impaired at the time of the incident, and individuals committing a felony (or fleeing one) at the time of the 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 have common-sense rules which only permit recovery of non-economic damages if a plaintiff is not primarily at fault for the accident. The Governor is seeking changes to the state'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. 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.

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

Reforming Joint and Several Liability

In New York, in cases with more than one defendant, each defendant can be held responsible for the entire amount of non-economic damages, regardless of their allocation of fault, if the other defendants fail to pay.

New York would join 28 other states in adopting a rule that would change this standard for defendants who are less than 50 percent at fault, so that these defendants are held responsible only for the damage they caused. This will allow insurance companies to price premiums lower, since they will only have to account for damages caused by the people they are insuring.

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. 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 and explain why the changes are happening.

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 is seeking to reduce insurance costs by enlisting drivers as partners in her efforts to make our roads safer, leveraging technology to reduce insurance rates. The Governor will require insurance companies to offer discounts on insurance rates when drivers voluntarily opt into programs that have been shown to reduce unsafe driving and fraud.

New York State Office for the Aging Acting Director Greg Olsen said, "Older adults are among the safest drivers. Statistically they are involved in the fewest crashes compared to other age groups, but many also struggle with high premiums. Car ownership and insurance protections are especially vital for many older adults to remain independent. I applaud the Governor for remedying the many cost drivers that can put this independence at risk as part of the Governor's bold affordability agenda."

New York State Department of Financial Services Acting Superintendent Kaitlin Asrow said, "Governor Hochul has proposed a strong and comprehensive plan to make auto insurance more affordable while maintaining a stable and competitive insurance market. DFS is proud to work with agencies across the state government to implement the Governor's proposals and deliver meaningful savings to New Yorkers."

Queens District Attorney Melinda Katz said, "As the District Attorney for Queens County, I have seen firsthand the prevalence of staged auto crimes. My office dutifully investigates and prosecutes scammers who orchestrate dangerous accidents for the sole purpose of extracting money from innocent drivers. Strengthening safeguards against fraud is equally important to ensure public safety and to prevent hidden costs from being passed on to every law-abiding motorist through higher insurance rates. Governor Kathy Hochul's proposals will provide law enforcement and regulators with additional tools to stop the abuse and protect drivers while lowering costs. I thank the Governor for her leadership."

New York City Council Speaker Julie Menin said, "New Yorkers deserve affordable auto insurance and they deserve clear answers when their premiums go up. I thank the Governor for her proposals that will help crack down on fraud and abuse while increasing transparency so consumers understand what they're paying and why. Our City Council is committed to supporting these actions that will increase transparency and make sure the system works for New Yorkers, not bad actors."

New York City Councilmember Kamillah Hanks said, "Governor Hochul's proposals take meaningful steps toward making auto insurance more affordable for New Yorkers, especially for working families in Staten Island and across New York City. By cracking down on fraud and closing legal loopholes, these measures help ensure that honest drivers are no longer forced to absorb the costs caused by bad actors. This is a practical and necessary approach that puts New Yorkers first and moves us closer to real affordability."

New York City Councilmember Selvena N. Brooks-Powers said, "Governor Hochul's proposals are an important step toward reducing insurance costs for New Yorkers already struggling to pay their bills. Increased auto insurance transparency is critical to ensuring a fair and equitable market for drivers across the state and builds on the insurance cost reductions I advanced as Chair of the Committee on Transportation and Infrastructure to protect for-hire vehicle drivers. I look forward to seeing these safeguards enacted to help protect the paychecks of hardworking New Yorkers from unwarranted auto insurance costs."

New York City Councilmember Elsie Encarnacion said, "With the reality of costs crushing people's pocketbooks, comprehensive action to reduce the financial pressure facing New Yorkers who want to or have to drive is more critical than ever. I want to thank Governor Hochul for proposing these sensible reforms to lower car insurance prices, and I look forward to collaborating with the governor on future efforts to make all forms of transit more affordable and accessible for New Yorkers at all income levels."

Manhattan Borough President Brad Hoylman-Sigal said, "Manhattan's pedestrians, cyclists, and responsible drivers deserve streets that are safer and fairer. Governor Hochul's proposals rightly recognize that drivers who break the law should not be rewarded with oversized payouts that ultimately raise costs for everyone else. During my time in the State Senate, I supported measures to strengthen accountability and protect New Yorkers from dangerous driving and insurance abuse, and I commend the Governor for advancing reforms that prioritize street safety, fairness, and affordability."

NAACP New York State Conference Economic Development Chair Garry Johnson said, "Governor Hochul's proposals to reform New York's auto insurance market are a necessary intervention that New Yorkers across the State will benefit from. By cracking down on fraud that has long inflated premium costs, the Governor is addressing root causes of our state's affordability crisis. These are common-sense reforms and a step in the right direction for everyone. The NAACP New York State Conference is proud to support these proposals."

The Business Council of New York State, Inc. President and CEO Heather Mulligan said, "The Business Council is pleased to see included in Governor Hochul's State Budget Proposal a package of meaningful insurance reforms to address the key drivers of high premiums, including insurance fraud, excessive litigation, outdated legal standards and gaps in enforcement. These reforms will support safer roads, fairer rules, and more affordable auto insurance for New York's families and employers."

Citizens Budget Commission President Andrew Rein said, "We commend Governor Hochul for proposing common-sense auto insurance reforms, which could reduce sky-high premiums New York's residents and businesses pay. These reforms would rightly bring New York in line with other states and save New Yorkers money without adding costs to the state. It's a smart choice."

Brooklyn Chamber of Commerce President & CEO Randy Peers said, "Insurance rates driven by out-of-control fraud and abuse contribute to the overall affordability crisis for both businesses and residents in New York State. The Brooklyn Chamber of Commerce applauds Governor Hochul's comprehensive approach to tackling this serious issue that impacts New York State's ability to retain companies and workers, and hampers economic growth."

Brooklyn Chamber of Commerce Vice Chair Gil Cygler said, "I commend Governor Hochul for bringing attention to insurance fraud which has been a silent killer to consumers in driving up costs not only for their cars but the cost of their Uber's, deliveries and car rentals. I was forced to exit the car rental business which employed 100 New Yorkers due to the limited availability of insurance for local car rental companies due to the rampant fraud in the no-fault industry. Revamping the no-fault procedures with common sense adjustments can save New Yorkers thousands of dollars. Kudos Governor Hochul for your focus on auto insurance reform."

Bronx Chamber of Commerce President & CEO Lisa Sorin said, "Governor Hochul's proposals recognize that auto insurance affordability is both a consumer issue and a business issue, and that the two are deeply connected. When fraud, abuse, and unnecessary litigation drive up costs, it burdens families and businesses alike. By cracking down on bad actors and ensuring that savings are returned to policyholders, these reforms can create a ripple effect that strengthens businesses, stabilizes prices, and eases pressure on working New Yorkers. At a time when affordability challenges are straining households and the businesses that power our state's economy, these proposals represent a practical and necessary step forward. The Bronx Chamber of Commerce stands with Governor Hochul to advance and implement these important changes."

Suffolk County Alliance of Chambers of Commerce Chairman Bob Fonti said, "Rising auto insurance costs are squeezing Long Island families and small businesses, and Governor Hochul is taking meaningful action to address it. Her proposals to crack down on staged accident fraud, modernize the no-fault system, and increase transparency in the insurance industry are practical, balanced steps that will help lower costs while protecting legitimate claims. Affordability is essential to economic growth, and these reforms recognize that insurance costs are not just a consumer issue but a business and workforce issue as well."

New York Insurance Association, Inc. President Cassandra Anderson, CAE said, "The New York Insurance Association appreciates Governor Hochul addressing fraud, abuse and excessive litigation to make auto insurance more affordable for New York drivers. Taking a strong stance against fraud and reining in excessive litigation are essential to tackling rising auto insurance costs. We stand with consumers in supporting solutions that reduce fraud and litigation and ensure there is a stable and sustainable insurance marketplace. We value the Governor's leadership and agree that action is necessary to protect New Yorkers."

Coalition Against Insurance Fraud Executive Director Michelle Rafeld said, "When fraud goes unchecked, consumers pay the price through higher insurance premiums. Governor Hochul's plan recognizes that staged crashes and organized fraud schemes hurt families and businesses across New York. The Coalition Against Insurance Fraud has long supported strengthening the prosecution of staged accidents in New York. The Coalition applauds Governor Hochul's proposal to pursue legislation targeting individuals who organize staged accidents. It is not only a cost-saving antifraud measure but also a life-saving effort that will protect honest drivers."

Partnership for New York City President and CEO Steven Fulop said, "Car insurance premiums in New York are, on average, 52 percent more expensive than in the rest of the country. This affordability gap is exactly why the Governor's reforms represent such a major victory for New York City's families and businesses, as they finally tackle the organized fraud and legal loopholes that have unfairly burdened honest drivers for far too long. By pairing an aggressive crackdown on staged accidents with common-sense changes to joint and several liability and the 'serious injury' threshold, the plan targets the root factors that have sent premiums skyrocketing across the Empire State. This bold approach will drive down the costs in the five boroughs and put real money back into the pockets of every New Yorker."

Lawsuit Reform Alliance of New York Executive Director Tom Stebbins said, "We're grateful to Governor Hochul for her leadership in ensuring our civil liability laws are not exploited by bad actors. By tackling rampant fraud, her proposals will help make insurance more affordable and our roads safer. They'll also ensure the sophisticated actors who orchestrate these schemes are brought to justice and not merely the vulnerable people recruited as drivers. Fraud and lawsuit abuse are not victimless crimes. As other states like Florida and Georgia implement civil liability reforms, consumers are seeing real savings. We applaud Governor Hochul for putting New Yorkers first and taking meaningful steps to protect us all from the hidden cost of fraud."

American Property Casualty Insurance Association Department Vice President Kristina Baldwin said, "APCIA commends Governor Hochul for championing measures to tackle cost drivers impacting auto insurance premiums in New York State, including proposals to fight the rampant insurance fraud that plagues auto insurance in New York as well as proposals to promote fairness in auto accident lawsuits. Reducing these cost drivers will help lower claims expenses and litigation costs, which are a major contributor to rising insurance premiums. By addressing these issues, consumers can ultimately benefit from more stable and affordable insurance costs; while ensuring they are protected from fraud and excessive legal costs. APCIA looks forward to working with the Governor and the legislature on these important issues."

New York Metropolitan Trucking Association Executive Director Patrick Hyland said, "The New York Metropolitan Trucking Association is thrilled to see Governor Hochul addressing this critical issue. Over the past few years, our membership has been navigating a marketplace with fewer carriers and rate increases that are unsustainable. We thank the Governor for listening to our concerns and implore the legislature to enact these much needed reforms in the 2026 New York State Budget."

Trucking Association of New York President Kendra Hems said, "We thank Governor Hochul for recognizing that the insurance affordability crisis is not an abstract issue, but a real threat to jobs, safety, and economic stability. Her leadership in addressing rising insurance and litigation costs, as well as fraud, represent critical steps towards keeping New York's businesses on the road, shelves stocked, and our workforce employed."

National Insurance Crime Bureau Office of Strategy, Policy, and Government Affairs Senior Director of Government Affairs Howard Handler, MPPA said, "Insurance fraud is not a victimless crime. For far too long, fraudsters have taken advantage of New York consumers and job creators - through staged accidents and other tactics - and the impacts have not only raised costs for all, but risked life and limb of those who are swept into these schemes. The National Insurance Crime Bureau applauds Governor Hochul's commitment to combat fraudulent claims and costly legal system abuse, and urges New York lawmakers to take action now."

Volunteers of America-Greater New York President and CEO Dr. Jeffrey R. Ginsburg said, "Non-profit organizations throughout New York are used to doing more with less, but we have seen auto insurance rates rise by as much as 50 percent in recent years without a commensurate increase in funding. We are grateful to Governor Hochul for her leadership in addressing affordability for all New Yorkers and tackling the root causes of rising auto insurance rates head on. These proposals will allow non-profit organizations like VOA-GNY to focus our resources on our core mission: providing housing, health, and workforce development services to New Yorkers experiencing poverty."

Suffolk Transportation Service President and CEO John Corrado said, "Every dollar we can save on auto insurance can help us to provide better service, save money for taxpayers, and support our bus drivers. We are grateful to Governor Hochul for recognizing that New Yorkers shouldn't have to pay the nation's highest auto insurance rates and for having the courage to take on this fight."

The Business Council of Westchester Executive Vice President and COO John Ravitz said, "BCW supports the Governor's proposal to lower insurance costs, specifically with regards to cracking crack down on fraud and bad actors to lower vehicle insurance rates by reinvigorating 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.

Orange County Partnership President and CEO Conor Eckert said, "High auto insurance costs strain household budgets and raise the cost of doing business across New York, and efforts to reduce fraud and increase transparency are important steps toward a more affordable and competitive environment. We thank the Governor for her focus on these issues and their impact on New York's businesses and workforce."

Nonprofit Westchester Executive Director Jan Fisher said, "We appreciate the Governor's commitment to tackling affordability and her agenda that addresses the unsustainable financial burdens on New Yorkers. She is taking critical steps toward easing financial strains."

LI Main Street Alliance and Vision Long Island Director Eric Alexander said, "The high cost of auto insurance for residents and business owners has come up repeatedly as an issue as we try to control expenses. Kudos to Governor Hochul for putting out a proposal to bring these crippling costs down and in line with other states."

New Hope Christian Fellowship and Community Activist Senior Pastor Bishop Orlando Findlayter said, "At a time when everyday costs are rising, Governor Hochul's focus on reducing auto insurance premiums shows real leadership. Making insurance more affordable is a necessary step toward economic relief for New York families."