Governor Kathy Hochul is continuing her push to overhaul New York’s auto insurance system, arguing the proposed changes could lower premiums for drivers while addressing fraud and excessive litigation. But the effort has sparked growing debate in Albany, with critics warning the plan could reduce protections for consumers without guaranteeing meaningful cost savings.
The issue comes as New Yorkers face some of the highest car insurance costs in the country. Drivers in the state pay an average of $1,895 per vehicle each year, well above the national average of $1,438.
Hochul has argued those costs are not driven by poor driving habits, but by the structure of New York’s laws.
“There’s no evidence that our drivers are any worse,” said Hochul during an April 21st press conference in Albany. “They don’t deserve higher premiums.”
At the center of the governor’s proposal are changes to how claims and lawsuits are handled following accidents. New York operates under a “no-fault” system, meaning drivers’ insurance policies must cover basic expenses such as medical bills and lost wages regardless of who caused the crash.
That coverage includes a minimum of $50,000 in personal injury protection. However, the system also allows individuals to pursue additional damages – such as pain and suffering – through lawsuits with no cap on potential awards.
Supporters of Hochul’s plan say that structure has contributed to rising costs by encouraging litigation and increasing payouts.
“A lot of that is due not just to the drivers. It is really due to state laws and state regulations,” said Sean Campion of the Citizens Budget Commission.
Campion noted that New York’s approach is uncommon compared to other states.
“New York is relatively rare among the states that [allow] you to sue regardless of whether you’re at fault or not,” he added.
The governor’s proposal would adjust several aspects of the system, including redefining what qualifies as a “serious injury,” limiting certain types of lawsuits and reducing payments in cases where an injured person was engaged in criminal activity, such as drunk driving.
Critics say the proposed changes could shift the burden onto drivers by limiting their ability to recover damages after an accident.
“The problem is the insurance company practices, not the policyholder, and by making these reforms, they’re just, you know, it’s going to make it harder for the consumer,” said Dr. Martin Weiss of Weiss Ratings.
Trial lawyers have also raised concerns about how the changes could affect compensation in disputed cases.
“You are unfortunately in a car crash at an intersection, accident, where you claim there’s a green light, and the other side claims it’s a green light,” said Andrew Finkelstein, president of the Trial Lawyers Association. “Right now, if a jury decided that case, and you were found to be 51% responsible, right now, you would collect 49% of what your damages are. That’s it.”
Finkelstein warned that under Hochul’s proposal, that calculation could change significantly.
“What she’s proposing is that should go to zero and you collect nothing, and the only one who benefits is the insurance company,” he continued.
The debate is also shaped by financial pressures within the insurance industry. A recent report found that companies paid out about 85 percent of claims in New York while still reporting losses exceeding 17 percent after expenses.
Some analysts say the cost of defending claims in court is a major factor.
“The cost of defending that is excessive. They have to go to court. They have to have lawyers. So that gets lost in the settlement dollar,” said Keith Minella of Legal Claims AI.
Hochul and her allies argue that reducing litigation costs and tightening rules around claims could ultimately bring down premiums. Some estimates suggest the changes could save drivers close to $200 per year.
“This system still preserves the right of people who are seriously injured to sue for damages,” said Campion.
The insurance overhaul is being negotiated as part of the state’s broader $263 billion budget, which remains unresolved weeks after its April 1st deadline. As discussions continue, some provisions have reportedly been modified or removed in an effort to gain legislative support.
