Governor Kathy Hochul announced a comprehensive plan to reduce car insurance rates for New York drivers, targeting fraud and legal loopholes that have driven premiums to among the highest in the nation. The proposal aims to crack down on staged accidents and fraudulent claims that cost New Yorkers an average of $4,000 annually—nearly $1,500 above the national average.

"Car insurance rates are just too damn high, especially at a time when families are feeling squeezed by the cost of living," Governor Hochul said. "High car insurance rates don't impact just drivers; they impact all New Yorkers when businesses pass on increased costs to customers. These reforms will crack down on fraud, help drive costs down, and put money back in the pockets of hardworking New Yorkers."

According to the governor's office, insurance carriers reported 38,270 incidents of suspected motor vehicle insurance fraud to the New York State Department of Financial Services Insurance Frauds Bureau in 2023—a record high representing a 58 percent increase over three years. In 2023 alone, there were 1,729 staged crashes in New York State, making it the second-highest in the nation for incidents of staged fraud.

The governor's initiative includes several key reforms. Hochul plans to reinvigorate the State's Motor Vehicle Theft and Insurance Fraud Prevention Board and introduce legislation allowing prosecutors to seek criminal penalties against anyone organizing a staged accident, not just the driver. Medical providers who participate in these schemes will also face consequences.

One major change involves extending the investigation window for insurers. Currently, insurance companies have just 30 days to investigate potentially fraudulent claims. Hochul's plan would give insurers more time to identify and avoid paying fraudulent claims, which add an estimated $300 to every New Yorker's yearly premium.

The proposal also includes a cap on non-economic damages for drivers committing crimes at the time of an accident, such as impaired driving, vehicular assault, or leaving the scene. Under current law, even drivers committing these crimes can receive generous payouts for pain and suffering.

Hochul wants to reform New York's comparative negligence law, which allows drivers mostly at fault for an accident to still collect extensive damages. The governor plans to follow the lead of states like Colorado, Connecticut, Delaware, Massachusetts, and New Jersey, which only permit damage recovery if a plaintiff is not primarily at fault.

The governor also seeks to establish clear criteria based on objective medical standards for what qualifies as a serious injury under New York's no-fault insurance law. The current threshold is vague and allows claims that stretch beyond reimbursement for actual medical expenses or lost wages.

"We applaud Governor Hochul's efforts to crack down on fraudulent lawsuits in the Empire State, and especially in the hotbed area of New York City, where the average family pays over $10,000 annually due to lawsuit abuse," said Lauren Zelt, executive director of Protecting American Consumers Together.

Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York, praised the announcement, saying the proposals will "help make insurance more affordable and our roads safer" while ensuring "the sophisticated actors who orchestrate these schemes are brought to justice and not merely the vulnerable people drawn into them."

The New York State Trial Lawyers Association opposed the plan, claiming it weakens victim protections and expressing skepticism that insurers will lower rates. However, supporters point to Florida's recent reforms, which stabilized the auto insurance market and led to rate reductions by an average of 6.5 percent last year.

To ensure consumers benefit from these changes, the Department of Financial Services will examine the Excess Profit Law that applies to auto insurers, particularly the current threshold trigger.

The legislative proposals will require approval from the state legislature. If enacted, the reforms could significantly impact insurance rates for New York's millions of drivers who have long struggled with some of the nation's highest premiums.

Elvis Duran