Money In Your Pockets: Governor Hochul Highlights Proposals To Bring Down Costs Of Auto Insurance Rates And Tackle Fraudulent Claims

The following information was released by the office of the Governor of New York:

Governor Kathy Hochul today highlighted her proposals to bring down costs of auto 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.

"For most people, car insurance isn't a luxury it's a necessity, especially here on Long Island where people rely on their cars to get to work, get to school or even go grocery shopping," Governor Hochul said. "These common sense proposals will crack down on the bad actors that are driving up the cost of car insurance and putting that financial burden on innocent, hardworking New Yorkers."

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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 43,811 incidents of suspected motor vehicle insurance fraud to the New York State Department of Financial Services (DFS) Insurance Frauds Bureau in 2025. This is up from 24,238 incidents of suspected motor vehicle insurance fraud from 2020, an 80 percent increase in five years.

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 non-economic damages, such as 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 using or operating a car while 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. 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 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 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 seriously injured in an auto accident to make claims for compensation that stretch beyond reimbursement for the medical expenses or lost wages associated with an injury. This additional compensation is intended to offer support for non-economic damages, like the pain and suffering of victims with serious injuries. New York's legal definition of serious injury is currently vague, applied inconsistently, and can include temporary injuries that only sideline an individual for a short time following an accident.

Governor Hochul will reform the serious injury threshold by proposing objective and fair medical standards for what qualifies as a serious injury. This reform will 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.

These common sense proposals will crack down on the bad actors that are driving up the cost of car insurance and putting that financial burden on innocent, hardworking New Yorkers."

Governor Hochul

Reforming Joint and Several Liability

In New York, in personal injury cases arising from auto accidents 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 significantly lower the costs of coverage. 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.

Suffolk County Legislature Minority Leader Jason A. Richberg said, "Across the board, New Yorkers are getting hit where it hurts most their wallets and it's essential that we do everything in our power to lighten that load. On Long Island, families depend on their cars to get to work, school, and medical appointments, and they shouldn't be punished with insurance premiums among the highest in the country because of fraud and abuse in the system. Governor Hochul's focus on cracking down on staged crashes and closing costly loopholes will help lower those premiums and have a meaningful impact on working families' monthly budgets. This is about affordability, fairness, and putting the needs of hardworking residents ahead of insurance companies."

Suffolk County Legislator Tom Donnelly said, "All across Suffolk County and New York State, costs are already high with people having to figure out how they will be able to pay utility bills, groceries, healthcare and other necessities. Paying some of the highest car insurance premiums in the country makes it even more difficult and challenging. I thank Governor Hochul for leading the way in looking at how to control rising auto insurance rates so that our hard-working residents can continue to afford and stay here."

Town of Babylon Supervisor Rich Schaffer said, "On Long Island, where families are already facing a high cost of living, rising car insurance premiums caused by staged accidents and fraud only add to the financial strain. These scams drive up costs for responsible drivers who play by the rules. I thank Governor Hochul for her leadership in tackling insurance fraud and fighting to put real money back into the pockets of Long Island residents."

Best Way Auto Collision of Deer Park, Inc. Owner Ibrahim Duman said, "Running an auto body shop on Long Island, you see how hard people work and how frustrating it is when their insurance costs keep going up. A lot of that comes from fraudulent claims. It means higher premiums for customers who did nothing wrong. I appreciate Governor Hochul coming here and taking this issue seriously because it's something that affects our customers and our community too often."

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."

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."

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."

Long Island African American Chamber of Commerce President Phil Andrews said, "Fraud is never a victimless crime. High auto insurance costs ripple through the economy, especially in our communities here on Long Island. They undermine economic mobility and make it harder and more expensive to operate a business, deliver products, commute to work, attend school, and visit family. I commend Governor Hochul for tackling the opportunism and abuses that drive up premiums and for working to make auto insurance more affordable for hardworking Long Islanders."

Long Beach Latino Civic Association Executive Director Helen Dorado Alessi said, "The high cost of fraudulent claims unfairly burdens everyone. We support the Governor's leadership in curtailing fraud and holding those responsible accountable to help lower insurance rates for ordinary New Yorkers. Addressing these systemic costs is a necessary step toward ensuring fair and accessible coverage for all residents. With the rising cost of living becoming a significant burden, families on Long Island are especially vulnerable. Since cars and trucks remain the most reliable form of transportation for our community, reducing these insurance costs is essential for local economic stability."

Contact the Governor's Press Office

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