The Explainer: How Gov. Hochul’s Car Insurance Agenda Hurts Victims, Helps Big Car, Big Insurance

Gov. Hochul’s proposal to lower auto insurance premiums — a legislative push coveted by Big Business and Big Tech for years — has raised more questions than car advocates and their enablers in the statehouse have answered.

Fortunately, Streetsblog has The Explainer. You’ve got questions, The Explainer has answers:

OK, first give me the 50,000-foot view on the proposal to reduce car insurance costs.

Hochul says car insurance premiums are too high because lax laws allow shady actors to exploit the system for “jackpot payouts,” including by staging crashes or exaggerating injuries, and that she hopes to bring them down in the name of “affordability.”

The governor also makes the case that some people injured in crashes are undeserving of compensation, such as people whom a jury determines to be more than 50 percent responsible for a crash, or uninsured or drunk drivers.

Seems reasonable enough?

Yes, it does seem reasonable! But her push to drive down and deregulate the cost of auto insurance would come at the expense of crash victims (more on them later). And it follows a well-established playbook of blaming bad actors to obscure the reasons why insurance companies actually raise prices.

Let’s back up, though. What exactly is car insurance?

Good question! Because most New Yorkers do not own cars, they have never thought about what car insurance is and how it functions.

Car insurance, or auto insurance, describes a large family of financial products designed to defray the unexpected costs of car ownership, including collisions, vandalism and injuries. Some drivers buy additional coverage to limit costs for crash-related medical bills and collisions with drivers who lack insurance themselves. Insurance companies routinely develop novel car insurance products, such as ride-share insurance, car replacement insurance and special insurance for classic cars.

Hochul’s proposal concerns liability insurance, which protects car drivers in the event that they harm another person or damage property with their insured vehicle. Every car owner living in New York must buy a minimum amount of liability coverage: $10,000 for property damage and at least $25,000 per person for crash injuries. Policies also must include $50,000 in personal injury protection, also known as “no-fault” insurance, which, as the name suggests, is designed to quickly cover medical expenses and lost wages, no matter who’s at fault.

New York is one of 12 states that has a no-fault law, and its regulations date back to the 1970s, replacing a so-called at-fault system, where crash victims had to sue to show that a driver was at fault. No-fault laws are designed to ensure prompt compensation for crash victims, and aim to reduce the case loads in the courts.

It’s worth noting that the level of coverage, $50,000, dates back to that time, and adjusted for inflation would be around $329,000 in today’s dollars.

Most states still have “at-fault” insurance, but it’s not clear that this lowers premiums for drivers, since expensive states like Louisiana and Mississippi follow this system, and Florida’s no-fault coverage is lower than New York’s.

So how does that work in reality?

Let’s say a motorist hits and injures someone, something that happens hundreds of times every day in New York State. No-fault insurance essentially becomes the victim’s health insurance, covering their medical expenses. It can also cover up to $2,000 a month in lost wages, and up to $25 per day for essential transportation. Since those costs can quickly exceed $50,000, victims who have serious injuries often sue the driver to get more compensation.

The majority of those cases don’t go to trial, but instead end in settlements, according to attorneys who have worked in the field. If a case does go to trial, a jury awards a dollar amount that the driver’s insurance company has to pay, adjusted by the percentage of fault for each party. If the motorist’s coverage runs out before it can pay the full amount, the court will issue a judgment to go after assets, like a car or a house.

If the motorist doesn’t have enough money or assets, victims can file a claim with the Motor Vehicle Accident [sic] Indemnification Corporation, a state-formed pooled insurance company of last resort, but payments only happen after a lot of paperwork is approved, according to Peter Beadle, a Queens-based lawyer and safe street advocate who frequently represents victims of crashes.

Victims are disqualified from getting a dime from the corporation if, for example, they didn’t file a police report within 24 hours of the crash. So it’s best to call the police to the scene of a crash, Beadle recommended.

Hochul and her backers have suggested that bad actors treat the auto insurance companies as cash cows, but securing a judgment is an arduous process and it can take months before victims see a dime, Beadle said. And much of the total award gets gobbled up by attorney’s fees and costs like paying doctors for medical testimony, which by itself can cost $10,000 for a doctor to show up in court for just one morning.

“Nobody’s hitting the jackpot,” Beadle said. “It’s astounding that [Hochul] even said that.”

OK, but why do I keep seeing ads about lawyers getting huge paydays for their clients?

Trial lawyers have skin in the game, since their business relies on getting a cut of the compensation that their clients receive. Lawyers who take out splashy ads boasting of big settlements don’t help the public perception of their profession as anything but greedy “ambulance-chasers,” but such big payouts aren’t actually common, Beadle added.

“It’s created an impression, not just in clients, but in the governor of New York, that people are getting these huge windfall results, when they’re not,” Beadle said.

So let’s focus on insurance costs. Are they high? And if so, why should a street safety advocate care?

New York has the fourth-highest personal auto insurance costs in the country, at $1,935 per household a year on average in 2024, making up 2.23 percent of a median household’s income, according to research by the Insurance Information Institute, or Triple-I, a trade organization for … the insurance industry. The most expensive state is Louisiana, followed by Florida and Mississippi.

It is unclear if New York’s auto insurance rates are, indeed, higher than they should be; premiums are higher downstate — but there is also a lot more risk of crashes and damages in densely populated urban areas like New York City, where the cost of medical care and repairs are also higher.

Driving is an incredibly dangerous activity, and crashes are the leading cause of injury-related deaths in the state, with an average of 1,098 fatalities, 12,093 hospitalizations and 136,913 emergency department visits each year — or one emergency visit every four minutes — according to the state Department of Health.

Crashes also cost the state a lot of money in medical care, lost productivity, legal and court costs, travel delay, pollution, and property damage.

In one year in New York alone, fatal and serious traffic crashes cost $135.4 billion in such societal harms, according to 2023 estimates by TRIP, a national transportation research organization.

If we do some back-of-the-envelope math, that breaks down to about $6,770 per New York resident, which roughly equates to 8 percent of the median household income in the state.

So that raises a central issue in the governor’s push: whether 2 percent is too high a price for drivers to pay to insure against the daily carnage and its cost for all taxpayers – especially given the price in life, limb and general wreckage traffic violence imposes on New Yorkers, regardless whether they drive.

So what is Hochul saying she will do about it?

The governor has proposed narrowing the state’s definition of “serious injury,” which entitles victims to more compensation than the bare minimum covered by no-fault insurance. Currently that includes injuries like fractures, permanent loss of an organ or member, loss of a fetus, or a medically-determined non-permanent injury that keeps one out of work for more than 90 days.

Hochul wants to disqualify people in that latter category of non-permanent injuries, even if the injuries keep victims from going through their day-to-day for three months.

In trials, juries apportion blame in a crash in percentages, and the award someone gets for their pain and suffering corresponds with that number. The governor also wants to get rid of this sliding scale of compensation for people who are found “mostly” at fault, or more than 50 percent.

So if someone is seeking $100,000 in damages, but a jury finds that person 30 percent at fault for the crash, that person only gets 70 percent, or $70,000. If the person is found 60 percent at fault, they are still entitled to $40,000.

But Hochul wants to scrap any compensation for someone found more than 50 percent at fault. Advocates and attorneys have raised red flags about this, because juries can be subjective and, for example, blame a cyclist for not wearing a helmet or for riding outside the bike lane, even if those behaviors are legal.

Lawyers are also less likely to take on cases if there’s a high chance that there will be no compensation at all, since they make their money from a cut of the award.

Who is pushing this?

Behind Hochul’s campaign-style press conferences and press releases is a well-funded lobbying machine backed by Uber, big trucking and coach buses under the guise of the murky group Citizens for Affordable Rates (predictably shortened to “CAR”). The Uber-led coalition has spent more than $1 million in ads over the past year and plans to drop another cool $7 million in lobbying in Albany this year, according to state filings.

The backers of Hochul’s car-first cause also includes the powerful business interest group the Partnership for New York City, whose leaders have also stumped for the policy and blamed rising costs on people staging crashes or otherwise exploiting the supposedly loose laws for “jackpot payouts.”

A CAR-pushed proposal in the City Council already successfully slashed no-fault insurance coverage requirements for cabbies from $200,000 to $100,000 last year, similarly shifting the cost of crashes onto victims of road violence by drastically cutting how much compensation victims get without having to sue. It’s unclear whether those changes have lowered rates in a meaningful way for taxi drivers.

But what about all the fraud?

In the governor’s press release, she alleged that there were 1,729 staged crashes in New York State in 2023. For some context, there were about 381,290 reported crashes that same year, according to data by the Department of Motor Vehicles, so even if you stipulate that the governor is right, those staged collisions comprise less than half a percent of all reported collisions — and an even smaller portion if you count all the unreported crashes.

The state’s chief executive also noted that insurance carriers’ reports of “suspected motor vehicle insurance fraud” are up in recent years. According to data from the state’s Division of Criminal Justice Services, insurance carriers reported suspected fraud 44,000 times in 2024, up from 17,000 such reports in 2017. Those include cases like no-fault insurance fraud, theft, arson, larceny from motor vehicles, vandalism, collision damage, falsified invoices and fraudulent insurance cards.

But these are merely suspected cases, and it’s unclear how many convicted cases there are because Hochul’s office declined to provide further data.

Insurance companies can be quick to claim that they’re being defrauded, the better to avoid having to make a payout.

Hochul shouldn’t fall for that, according to Douglas Heller, a nationally recognized insurance expert with the Consumer Federation of America, a consumer-interest research and advocacy group.

“When you conflate those two you end up making really bad policy decisions, like taking away people’s rights in crashes,” Heller said.

How do we know whether fraud is driving up cost?

The short answer is we don’t.

The slightly longer answer is there is little evidence that fraud or New York’s legal protections for people injured in crashes increase the cost of car insurance, but Hochul has aggressively repeated that industry talking point anyway, while doing little to confront industry practices or traffic violence.

This is not a new argument, and relies on the concept experts call “social inflation,” a common narrative in the insurance industry more broadly, which claims that attorneys and other opportunists abuse lax laws and gullible jurors to game the system for big payouts.

Insurers have been trying to blame lawyers for rising costs for decades, but when researchers look into that claim they have found the data “wanting,” according to recent review by Professor Ken Klein of California Western School of Law.

It echoes the larger tort reform movement of going after supposedly frivolous lawsuits while actually reducing people’s rights to sue for real damages.

The most glaring example is the case of a woman who suffered third-degree burns after spilling McDonalds coffee on herself, and successfully sued for nearly $3 million in the 1990s. The case drew ridicule in the press and popular culture. But it also revealed that the fast food giant had ignored warnings that its beverages were dangerously hot for years.

OK, so what does affect insurance premiums?

So many things! Take an obvious thing that insurance companies and the governor never seem to talk about: vehicles are larger than ever — and their added weight causes worse injuries.

And over the past decade, climate change has caused more natural disasters, such as floods, that result in a higher number of “totaled” vehicles — and those cars themselves are more expensive to replace because they’re now commonly filled with more expensive high-tech components, said one insurance broker.

“Any of the recent natural disasters … every picture you can imagine has a dead car in it, either burned up or flooded or crushed,” said Jessame Hannus, commercial insurance broker at Risk Strategies, Braun and Braun, who is also a street safety advocate based in Queens.

“There are a lot of pressure points on the insurance industry that are pushing the premiums,” Hannus added. “The answer to all of this cannot be open season on the people on the streets.”

How are insurance rates even set?

You’d think that the worst drivers would have the most expensive insurance, but it’s much more likely that your insurance company is setting your premium based on your credit score or where you live, said Chuck Bell, a programs director at Consumer Reports, a non-partisan consumer advocacy organization.

“Even if you’re an excellent driver, you can still get a sky-high premium if you have a fair or poor credit,” Bell told Streetsblog.

As an extreme example, if you live in the wealthy 10004 ZIP code covering the Financial District and have excellent credit, insurance rates could be as low as $1,058, while someone living in the 10454 area in the South Bronx with poor credit would get a rate of $27,634 from the same insurance company, according to a pricing tool by NPR.

“The way insurance companies slice and dice the market is what makes insurance particularly unaffordable for low-income consumers,” said Heller.

Those practices “bake in” longstanding inequities of race and income, according to research by the National Consumer Law Center, a consumer advocacy organization focused on low-income people. In other states, including California, Hawaii and Massachusetts, insurers are not allowed to use credit scores to determine rates.

So why is Uber and Big Tech pushing this?

Lowering insurance costs will be a huge win for companies with drivers, which covers a large swath of businesses. Companies that rely on independent contractors like Uber have reported increasing costs as they have expanded their business and put more drivers on the road, since they expose themselves to more risk of crashes.

Uber’s insurance expenses increased by $1.3 billion in 2024 over the year before, which the tech giant attributes to an “increase in insurance rate per mile and miles driven,” according its most-recent annual report filed with the Securities and Exchange Commission last year. The tech giant’s annual revenue from its Mobility division still soared by 26 percent to more than $25 billion during that time, so clearly the higher insurance cost is not a profit-buster.

When costs for its drivers go up, such as premiums, worker organizers tend to also push regulators like the New York City Taxi and Limousine Commission to increase per-mile rates that app companies have to pay their drivers.

Did you discover an unseemly link between the governor and Uber?

Yeah, funny thing about that: When the governor announced her proposal to reduce insurance costs, we asked a few questions, and, instead of answering them, the governor’s office merely forwarded a set of talking points that had been forward to the governor’s office by a top Uber official.

Here’s what that looked like:

Our subsequent reporting also revealed that the Uber-fronted group CAR hired consultants Albany Strategic Advisors for 2025 and this year to lobby for insurance changes statewide, according to the state’s Commission on Ethics and Lobbying in Government. 

Uber gave the group “at least a million dollars,” early last year, and the group also spent six figures on an ad campaign at SOMOS, the annual get-together of New York’s politicos in Puerto Rico late last year. And in December, the group sent people dressed up as the Grinch to distribute fliers outside City Hall. Early this year, the organization dropped a cool $1 million for a television ad.

CAR’s supposed push for “affordability” should raise red flags given the big tech and auto-focused interests behind the move, said John Kaehny, executive director of the government watchdog group Reinvent Albany. 

“Uber’s priority is Uber,” said Kaehny. “The basic equation here is whether or not drivers have to pay for the damage they do. That is an extremely high cost to society, and that cost should be internalized with the users, not subsidized by the taxpayers – that’s insane.”

What are experts and advocates saying about all this?

Insurance experts and consumer advocates slammed the governor and her supporters for eroding New Yorkers’ rights while ignoring proven methods to better regulate insurance.

“Solving the insurance problem by making it harder for injured people to recover after a crash is utterly misguided,” said Heller, of the Consumer Federation of America. “The answer would be, ‘Let’s reform the insurance companies’ pricing models,’ but that would mean standing up to the insurance companies.”

Safe street advocates have urged Hochul to focus on crashes, not eviscerating victim’s rights.

“The other way to reduce the number of claims is to literally reduce the number of claims by reducing the number of crashes,” said Beadle.

Isn’t the real issue that insurance rates are not set by your driving record?

Using driving records to set premiums would promote safer behavior behind the wheel. There are also tools like apps that monitor your driving that can lower premiums, Bell noted.

“You should price us on how we drive not based on who you think we are demographically,” Bell said.

Albany lawmakers could also revive an effort to require insurance companies be notified if their policyholders get repeat violations from speed- and red-light cameras. In 2022, state pols killed a bid to require insurance companies get an alert when a driver got five or more school-zone speeding tickets within a two-year period.

At the end of the day, the state requires drivers to take out insurance because it provides protection when they hurt others or themselves, and Hochul should not diminish those protections for all New Yorkers to benefit the few.

“You don’t solve the problem of high insurance rates by reducing the value that the product brings to society,” said Heller.

You’d think that insurance companies would want to know when their drivers get all those tickets!

You would, wouldn’t you? But car advocates always push back because camera-issued tickets are written to a car, not a specific driver — though safety advocates point out that the driver should be penalized if he or she allows the car to be driven in such a reckless manner. (The owner of the car is aware of the recklessness because he or she is the one who gets the tickets.)

It’s kinda funny that Hochul is taking this up now. She’s been governor since since 2021.

Well, the state has the power to review any rate hikes. But then again, Hochul’s Department of Financial Services approved increases of as much as 22 percent in late 2024. Hochul may simply be looking for a way to say she saved car owners money after implementing congestion pricing tolls last year.

What does the governor say about all this?

Through a spokesperson, Hochul accused the people consulted in this story of being in the tank for trial lawyers, who have been the most vocal critics of her policy. Spokesman Sean Butler claimed that the governor’s proposal will increase safety by ending a system where a drunk driver can still get compensation if they’re only “somewhat” at fault.

“This is an outrageous case of selection bias that may as well have been sourced by the trial lawyers themselves,” Butler said in a statement. “Gov. Hochul is sick and tired of a system that rewards fraudulent behavior which has made New Yorkers less safe on our roads and created sky-high premiums for drivers who play by the rules.

“This proposal brings needed relief to New Yorkers who pay among the highest rates in the nation while ensuring that dangerous drivers who behave badly on the road no longer get a payday if they are involved in an accident for which they are at fault,” Butler added.

Butler cited a recent report by the Partnership for New York City as evidence that phony litigation was the root cause of the state’s comparatively high costs.

The report by the business group argues that reports by insurers of suspected fraud are increasing, but again, the paper didn’t include data on actual confirmed cases of auto insurance fraud.

It’s also worth noting that lobbyists want Hochul to go even further and “reform” basic protections like the state’s so-called “no-fault” insurance laws, which requires drivers to carry insurance that quickly compensates victims for injuries, regardless who is at fault.

But if this is such a slam dunk, why are some strong supporters of cracking down on insurance fraud balking?

You noticed that, huh? We’re touched. Indeed, after the governor’s proposal came out, we asked Assembly Speaker Carl Heastie about it, and he wasn’t that enthusiastic.

“I do agree that insurance rates are very high, but we have to figure this out, because I do think victims of accidents [sic] need to have their settlements and their days in court,” he told reporters. “We don’t want to leave victims of accidents [sic] without being compensated.”

And Queens Assembly Member David Weprin, who literally stood next to Hochul at a press conference on this subject last week, admitted that changes in compensation for victims made him uncomfortable.

“I’m not 100 percent behind the governor’s proposal,” he told Austin C. Jefferson of Streetsblog Empire State last week.

When are we going to hear about this again?

The state Legislature will hold a budget hearing on transportation proposals on Tuesday, Feb. 3 at 9:30 a.m. in Albany. For info, click here.