In Albany, there’s no shortage of problems lawmakers acknowledge are broken. There is, however, an endless supply of excuses for why those problems never get fixed. That’s why Gov. Kathy Hochul’s decision to take on lawsuit abuse driving New York’s auto insurance crisis stands out.
New York has the highest auto insurance rates in the country. Full auto insurance coverage costs more than $4,000 annually, compared with $2,679 nationwide, according to Bankrate. The disparity for minimum coverage is even starker — New Yorkers pay more than twice the national average.
That burden doesn’t fall only on drivers. High insurance costs raise the price of a cab ride, food delivery, a plumber’s house call. Small businesses pay more to operate. Even New Yorkers who have never owned a car feel the impact in higher everyday costs.
Hochul is right that this didn’t happen by accident, noting in her State of the State address last week that these cost increases are “because of rampant fraud and runaway litigation costs.” It’s the predictable result of a legal system riddled with outdated rules, vague standards and incentives that reward abuse rather than accountability.
New York’s auto insurance laws have become a magnet for fraud and excess litigation. Fraudsters stage car crashes. Minor injuries are exaggerated into major lawsuits. Under current law, even drivers deemed mostly at fault in an accident can still recover substantial payouts — a feature of New York’s pure comparative negligence system that can drive up insurance costs for all.
The scale of the problem is undeniable. In 2023 alone, insurers reported more than 38,000 suspected cases of auto insurance fraud to the state, a record. New York consistently ranks among the worst states in the nation for staged crashes. Fraud adds hundreds of dollars a year to the average policy.
Confronting this reality means confronting powerful interests. Trial lawyers are both a courtroom force in New York and a political one. Campaign finance records show that trial lawyer-affiliated PACs and plaintiffs’ firms are among the most significant donors to Democratic candidates and leadership in Albany. They have long supported Hochul and other statewide officials.
That’s what makes the governor’s stance so notable. Rather than protecting a politically convenient status quo, Hochul is following the evidence, and acknowledging that this system cannot continue as it has.
Her comprehensive proposal includes strengthening coordination among state police, financial regulators, the Department of Motor Vehicles and prosecutors to crack down on fraud, and tightening the definition of “serious injury” so lawsuits are reserved for genuine harm.
The plan also maintains critical consumer protections. Insurers would still face penalties for delaying legitimate claims, and the state’s Excess Profit Law would ensure that any savings generated by reform flow back to policyholders — not corporate balance sheets. Residents would get clearer explanations for rising rates.
New York has protected a broken status quo for too long. Gov. Hochul’s willingness to challenge and seek to end that lawsuit-driven system, even when it means breaking with long-standing political allies, reflects real leadership.
Auto insurance shouldn’t feel like a second rent payment. Cracking down on lawsuit abuse won’t solve every affordability challenge New Yorkers face, but it’s a necessary step toward restoring fairness, accountability and relief for families across the state.
This guest essay reflects the views of Lauren Zelt, executive director of Protecting American Consumers Together, a legal reform nonprofit.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.