New York Auto Insurance Reform:
Governor Kathy Hochul has proposed a sweeping set of auto insurance reforms as part of her Executive Budget that, if enacted, would represent the most significant changes to New York's auto insurance landscape in decades. The stated goal is to bring down costs of auto rates and perhaps most significant for litigators, tackle fraudulent claims. The Citizens Budget Commission (CBC), a nonpartisan fiscal watchdog, recently submitted testimony in support of these reforms underscoring the growing momentum behind them. Below are the key highlights of the proposed reforms and what they could mean for your business.
The Problem: New York's Broken Auto Insurance Market
New York's auto insurance market has long been an outlier. New Yorkers currently pay among the highest premiums in the country. The average auto insurance premium per vehicle in New York was the third highest in the nation in 2023, and with Florida and Louisiana having since passed their own tort reform packages, New York is likely now the single most expensive state for auto insurance. The Governor's office reports that the average policy in New York now exceeds $4,000 which is roughly 60 percent above the national average.
Despite those elevated premiums, insurers argue and statistics support that insurers are not profitable in this market. Personal auto insurers in New York posted a 17.2 percent underwriting loss in 2023 after accounting for claims and operating costs. Commercial auto insurers fared worse, losing 28.1 percent. Losses are driven primarily by liability and no-fault claims — the very areas these reforms target.
The Proposals: Four Key Changes
The Governor's reform package addresses the structural legal issues that have made New York so costly for insurers:
1. Redefining the "Serious Injury" Threshold
Under the current no-fault framework, drivers with minor or non-permanent injuries can nonetheless pursue tort claims beyond the no-fault limit. The proposed reform would tighten the serious injury threshold, limiting litigation to claimants with the most substantial injuries while preserving their rights. This would reduce the volume of minor-injury claims that currently flood the courts and drive up liability costs.
2. Modified Comparative Liability
New York remains a minority state, still using a pure comparative liability standard, which allows injured drivers to recover damages even when they are primarily at fault for an accident. The proposal would shift New York to the modified comparative liability standard used by most other states, barring recovery of non-economic damages for drivers who are at fault. This is one of the most significant structural changes in the proposal and would directly reduce the volume and value of liability claims.
3. Caps on Non-Economic Damages for Uninsured or Lawbreaking Drivers
The reform would cap non-economic damages for drivers who are uninsured or injured while breaking the law. This targets a category of claims that has contributed to outsized verdicts and mounting insurer losses.
4. Reform of Joint and Several Liability
Currently, auto accident cases in New York are exempt from the State's general protections against joint and several liability. This means a single deep-pocketed defendant (frequently a taxi or for-hire vehicle company, a municipality, or a public authority) can be held liable for the entirety of a plaintiff's damages even if that defendant is only minimally at fault. The proposed reform would bring auto cases in line with the general standard, ensuring defendants are only responsible for their proportionate share of fault. For insurers covering commercial fleets, municipalities, and transportation companies, this change alone could materially reduce exposure.
What Other States' Experiences Tell Us
The reform proposals are not untested. Michigan, Florida, and Louisiana have all recently enacted comparable changes, and the results are instructive:
Michigan reformed its no-fault personal injury protection rules in 2019; an independent evaluation found premiums dropped 18.8 percent between 2020 and 2024.
Florida moved from pure to modified comparative liability in 2023; insurance officials report rate reductions of up to 15 percent, fewer liability claims filed, and smaller awards.
Louisiana followed with similar reforms in 2025.
The CBC estimates that a 10 percent reduction in premiums in New York (a conservative benchmark compared to Michigan and Florida's results) would save New York drivers $1.9 billion annually, or at least $200 per vehicle per year.
What This Means for Insurers
For insurers operating in New York, passage of these reforms would likely bring:
Reduced claim frequency and severity, particularly for liability and no-fault lines, as a narrowed serious injury threshold and modified comparative standard limit the pool of actionable claims
A hopeful decline in insurance fraud, theft, and filing of false claims
Reduced exposure in commercial and fleet lines, particularly given the joint and several liability reform
A more competitive and sustainable New York market, making it more viable for insurers to underwrite and retain business while increasing profitability
The litigation environment may shift in ways that require strategic adjustment. There will undoubtedly be a period of uncertainty as courts interpret the new statutory language. If passed, we anticipate significant motion practice around the redefined terms.
Next Steps
Gerber Ciano Kelly Brady will be monitoring these legislative developments closely. We are prepared to advise our clients on how to position their litigation strategies, claims handling protocols, and coverage positions in light of any enacted reforms. We will provide further updates as the legislative session progresses.
For questions about how these proposals may affect your specific lines of business or pending matters, please contact your attorney at Gerber Ciano Kelly Brady or contact us today.
This client alert is for informational purposes only and does not constitute legal advice.
