New York State Governor Kathy Hochul announced on May 8 that the 2026–27 state budget agreement includes measures aimed at addressing surging auto insurance premiums by modernizing state insurance laws and aggressively cracking down on widespread fraud and abuse. The agreement is designed to provide direct relief to millions of New York drivers by targeting the underlying causes of insurance costs that are nearly double the national average.
José Bayona, spokesperson for Citizens for Affordable Rates (CAR), said:
“This agreement is a big win for New Yorkers struggling to get by in the midst of an affordability crisis. For too long, drivers in this state have paid nearly twice the national average for auto insurance, while a broken system and rampant fraud have driven costs even higher. Governor Hochul and lawmakers have taken decisive action to address the root causes of this crisis. By strengthening enforcement and modernizing outdated rules, they are helping put money back in people’s pockets. These reforms will bring real relief for working families and mark a meaningful step toward making New York more affordable.”
Reducing auto insurance costs for New Yorkers
New Yorkers pay some of the highest auto insurance premiums in the country, averaging over $4,000 per year—nearly $1,500 above the national average. The high costs are driven by fraud, lawsuits, legal loopholes, and weak enforcement. Insurance fraud, including staged car accidents, is estimated to add up to $300 per driver per year.
The final budget includes a set of practical legislative reforms aimed at returning money to New Yorkers, preventing bad actors and fraudsters from exploiting the system, and requiring insurers to pass savings on to consumers.
Key provisions in the final state budget include:
- Limiting compensation for criminal conduct: Drivers involved in criminal activity at the time of an accident—including unlicensed driving, DUI, or felony offenses—will face caps on recoverable damages.
- Clarifying the definition of “serious injury”: Only individuals who can objectively demonstrate serious injuries will be eligible for pain and suffering or emotional distress damages.
- Restricting claims by primarily at-fault drivers: Drivers found mostly responsible for an accident will be barred from seeking excessive damages.
- Preventing excessive insurer profits: Legal thresholds will be established to prevent insurers from earning excessive profits and to ensure savings are returned to consumers.
- Strengthening rate approval oversight: Insurance companies will be required to obtain explicit approval from the New York State Department of Financial Services before implementing rate changes.
- Protecting consumers from unfair pricing: Insurers will be prohibited from using unrelated factors such as home ownership, occupation, education level, or ZIP code when setting rates.
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These measures will be implemented as part of the governor’s “whole-of-government” anti-fraud strategy, coordinated through the Department of Financial Services (DFS), Department of Motor Vehicles (DMV), Division of Criminal Justice Services (DCJS), and the New York State Police (NYSP), to ensure more active and unified enforcement.
