Taking Steps To Battle Fraud, Limit Damages Paid Out to Bad Actors and Ensure Consumers, Not Insurance Companies, Are Prioritized
Proposals Build on Governor’s Ongoing Efforts To Make New York State More Affordable and Put Money Back Into Pockets of Hardworking New Yorkers
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.
“New Yorkers know all too well that the cost of car insurance is just way too high, and for most, having a car is a daily necessity whether you’re required to travel for work or to run errands,” Governor Hochul said. “These common-sense proposals will not only crack down on fraudulent claims that drive up the cost of car insurance, they’ll put money back into the pockets of hardworking New Yorkers, allowing them a sense of relief.”
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.
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.
