New York Gov. Kathy Hochul signed a package of auto insurance reform bills into law on Wednesday with the aim of helping to lower premiums for New Yorkers.
The laws mainly target legal system abuse, large jury awards and staged accidents, which Hochul says are responsible for the state's outsize insurance rates.
On average, New Yorkers pay just over $4,000 annually for auto insurance, roughly $1,500 more than the national average. Some studies have found that staged crashes and associated insurance fraud are increasing premiums by up to $300 a year.
"Outdated laws, special interest loopholes and jackpot insurance payouts to bad actors have long forced New Yorkers to pay some of the highest car insurance rates in the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 in a statement.
The new laws limit damages for individuals engaging in unlawful behavior at the time of an accident, capping noneconomic damages at $100,000 for drivers who are at fault, uninsured or impaired. They also tighten statutory definitions of what constitutes a serious injury to limit damages for pain and suffering and emotional distress to those who are able to objectively demonstrate their injury.
Drivers who are deemed mostly at fault in an accident will no longer be able to sue their victims, and prosecutors will now be able to seek criminal penalties against any party involved in staging an auto accident, not just the driver.
The package of laws also sets a legal threshold that prevents excess profit for insurance companies and returns savings to customers, and it prohibits insurance companies from setting rates based on factors like homeownership status, occupation, education level or ZIP code. New safeguards also prevent insurance companies from raising rates without approval from the state's Department of Financial Services.
Hochul's office points to similar reforms in Florida that have helped lower rates for drivers. According to an analysis from Florida's Office of Insurance Regulation, a 2023 tort reform package has led to a 5.6% decrease in average auto insurance rates for most drivers in the state.
Photo credit: Jordi Clave Garsot/Adobe Stock
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