Proposed Reforms Aimed at Reducing Auto Insurance Rates in New York
New York State's budget deliberations have been delayed due to ongoing discussions about proposed reforms aimed at reducing auto insurance rates. Governor Kathy Hochul is advocating for changes that counter the influence of the trial lawyers lobby and seek to make auto insurance more affordable for drivers.
Key among the proposed reforms is an initiative to enhance the oversight of insurance rate adjustments by the Department of Financial Services (DFS). Currently, only annual premium increases of 5% or greater require DFS approval. Advocates, including trial attorneys, suggest that all rate hikes should undergo scrutiny to align with efforts to lower insurance costs.
Governor Hochul's reform proposals are embedded in the state budget documents: the public protection and general government budget (S9005A, Part F) and the transportation and economic development budget (S9008A, Part EE and Part FF). One reform addresses the issue of auto insurance fraud, aiming to expand the legal accountability for individuals orchestrating staged motor vehicle accidents.
Another significant proposal is to limit pain and suffering awards to $100,000 for drivers involved in accidents while uninsured, impaired, or committing a felony. This measure is intended to further curb the financial burden associated with fraudulent or reckless driving behavior.
The existing no-fault insurance rules in New York remain unchanged under the proposed reforms, with damage coverage maintained at $50,000. However, insurance companies would be afforded additional time to investigate suspect claims, although they must pay interest on payments delayed beyond the current 30-day window.
The definition of "serious injury" in the law may be revised to remove a clause allowing claims based on temporary non-permanent injuries lasting 90 days within 180 days after an accident. The other categories defining serious injury would remain intact.
Additionally, Governor Hochul is proposing a shift from New York's current pure comparative negligence rule to a modified comparative negligence framework, which is already in use in 35 other states. This change would prevent those predominantly at fault in an accident from recovering damages. Another area of reform is joint and several liability, which currently allows plaintiffs to pursue full recovery from defendants irrespective of their level of fault. Hochul's plan would cap defendants' liability to their percentage of fault if less than 50%. While agreement on joint and several liability may be challenging to achieve, the broader set of reforms holds potential for reducing overall auto insurance costs in the state.