New York Gov. Kathy Hochul has announced a plan to reduce auto insurance costs in the state through measures targeting fraud and legal system reforms.
The proposal addresses what the Department of Financial Services identified as key cost drivers: fraud, legal loopholes, and enforcement gaps.
New York drivers pay an average of $4,000 annually for coverage, nearly $1,500 above the national average, according to DFS. Staged accidents and related fraudulent activity account for as much as $300 of that annual total.
New York is one of six states that recorded auto insurance increases exceeding 50% between 2024 and 2025. The others were Louisiana, Nevada, Georgia, Maryland, and Utah. The Zebra projects the average US driver will pay $2,256 in annual auto insurance premiums for 2026.
The plan would expand the authority of the state's Motor Vehicle Theft and Fraud Prevention Board to investigate and prosecute fraud statewide. It also includes provisions for working with district attorneys to target organized fraud rings and pursuing criminal penalties against staged-accident organizers.
Under the proposal, insurers would receive extended timelines to report fraud, replacing the current 30-day window. The plan would also reduce barriers to alleging fraud in court and strengthen penalties against healthcare providers involved in fraudulent billing.
Hochul's proposal includes caps on non-economic damages for drivers who violate laws at the time of an accident, such as driving without insurance or while intoxicated. The plan would also limit damages for drivers found mostly at fault, a practice DFS said most states already prohibit.
Joint and several liability rules would also change under the plan. Defendants less than 50% at fault would be responsible only for the damage they caused, rather than potentially covering the full amount if other defendants fail to pay.
"These common-sense proposals will not only increase auto insurance transparency for New Yorkers, but they will also put money back into people's pockets, especially during a time when the cost of living is just too high," Hochul said.
Insurance trade groups responded to the announcement. Cassandra Anderson, New York Insurance Association president, said that "taking a strong stance against fraud and reining in excessive litigation are essential to tackling rising auto insurance costs."
Jason Bartow, president of the Professional Insurance Association New York, said the proposals reflect challenges independent agents face as premiums rise.
He added that PIANY will advocate for solutions that maintain a competitive insurance market while respecting consumer privacy and preserving the role of independent agents.
