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

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.”