New York Moves to Cut Auto Insurance Costs as Governor Hochul Announces Budget Deal

Governor Kathy Hochul has announced a major agreement in New York’s FY 2026–27 State Budget aimed at reducing auto insurance costs for millions of drivers across the state. The agreement includes reforms to modernize outdated insurance laws and crack down on fraud and abuse that officials say have driven premiums to extremely high levels.
New York currently has some of the highest car insurance costs in the United States. On average, drivers in the state pay more than $4,000 annually for coverage — nearly $1,500 above the national average. Officials say staged crashes, insurance fraud, excessive litigation, and legal loopholes have significantly increased premiums for everyday drivers. Some estimates suggest that fraudulent accidents alone add as much as $300 per year to the average driver’s insurance bill.
Governor Hochul said New Yorkers have been burdened for too long by a broken system that allows abuse and unnecessary costs to drive up insurance rates. She said the new reforms are designed to crack down on fraud, strengthen oversight, and put money back into consumers’ pockets.
Under the final budget agreement, several major changes will be introduced:
• Payouts will be capped for drivers engaged in criminal behavior at the time of an accident, including uninsured drivers, drunk drivers, and individuals committing felonies.
• The law will better define what qualifies as a “serious injury,” ensuring that large claims for pain, suffering, or emotional distress are limited to individuals who can objectively prove severe harm.
• Drivers found primarily responsible for causing an accident will no longer be able to seek excessive damage payments.
• New legal limits will prevent insurance companies from excessively increasing premiums or generating unreasonable profits.
• Insurance companies will be prohibited from raising rates without explicit approval from the Department of Financial Services.
• Insurers will also be barred from setting rates based on factors such as homeownership status, occupation, education level, or ZIP code.
State officials said the reforms will be supported by a coordinated effort involving the Department of Financial Services, the DMV, the Division of Criminal Justice Services, and the New York State Police to aggressively combat insurance fraud.
José Bayona, spokesperson for Citizens for Affordable Rates (CAR), called the agreement “a major victory” for New Yorkers struggling with rising living costs.
“For too long, drivers in this state have been paying nearly double the national average for auto insurance,” Bayona said. “These reforms will provide meaningful relief for working families and help make New York more affordable.”
Citizens for Affordable Rates (CAR) is a coalition of citizens, advocates, and organizations working to address the root causes of high auto insurance costs in New York through advocacy, education, and policy reform.