New York's Car Insurance Reform Is on Life Support — What Happens If It Dies in the Budget?

New York Governor Kathy Hochul's ambitious auto insurance reform — backed by 86% of state voters — hit a wall in Albany when both the State Assembly and Senate released their budget proposals without her proposals to cut premiums. With the April 1 budget deadline now here, the governor is fighting to negotiate the reforms back into the final deal.

The stakes couldn't be higher for New York's 13 million registered drivers. New Yorkers already pay an average of $341 per month — or more than $4,000 per year — for full coverage auto insurance, nearly double the national average, according to Bankrate. In New York City and surrounding areas, some drivers face premiums of $5,000 to $7,000 per year. And after a 13.5% increase in 2025 (the fourth-highest in the country), many households are at a breaking point.

What Hochul's Reform Would Do

Hochul's proposals, known as Part EE in the budget framework, target the root causes she says are driving New York's sky-high rates: rampant fraud, excessive litigation, and legal loopholes that encourage "jackpot" lawsuits.

The reform package includes five key components:

• Crack down on staged crashes: Create new criminal liability for organizers of staged accidents — not just the drivers
• Tighten the "serious injury" threshold: Refine when lawsuits for pain and suffering can proceed, eliminating the widely abused 90/180-day category
• Cap "jackpot" damages: Place guardrails on noneconomic damages when a driver is "mostly" at fault in an accident
• Mandate safe-driver discounts: Require insurers to offer discounts for telematics apps and safe-driving devices
• Require excess profit refunds: Force insurers to return profits above a set threshold back to policyholders

According to the governor, these reforms could save New Yorkers 15% to 20% on their premiums — translating to roughly $600–$800 per year for an average policyholder. Fraud alone is inflating premiums by an estimated $300 per year per driver, according to the state's Department of Financial Services.

Why It Hit a Wall in Albany

Despite broad public support, both legislative chambers left the reforms out of their one-house budget proposals — the opening negotiating positions before the final deal is struck.

The Assembly's silence largely reflects Speaker Carl Heastie's long-standing practice of keeping non-fiscal policy out of the budget document. The Senate's position was more direct. "The reason why we omitted [the insurance proposal from the budget] is because it is a broader conversation," Senate Majority Leader Andrea Stewart-Cousins told Streetsblog NYC.

The main organized opposition comes from the New York State Trial Lawyers Association (NYSTLA), which argues the reforms would pad insurer profits while stripping injured victims of their rights. "These proposals weaken individual rights, limit access to care, and severely reduce the accountability of insurance companies with absolutely no proof one New Yorker's car insurance will be lowered as a result," said NYSTLA president Andrew Finkelstein in budget testimony.

Several lawmakers expressed skepticism about the reform's promised savings, asking for formal analysis proving the numbers. Assembly Member Philip Palmesano noted both the industry and government have cited Florida data showing reforms helped lower costs, but contended they have yet to show any "formal, actual analysis" that verifies the same would happen in New York.

The Fraud Problem, by the Numbers

The data behind Hochul's claims is substantial. According to the NY Department of Financial Services, there were nearly 39,000 reports of suspected no-fault insurance fraud and 42,000 suspected healthcare fraud reports in 2024 alone — nearly double the numbers from 2020.

Trial lawyers are spending record sums in New York. In 2025, plaintiffs' attorneys poured nearly $179 million into local legal advertising across New York — an 84% increase since 2023, according to the American Tort Reform Association. The largest single spender, Morgan & Morgan, doubled its budget year-over-year to $27.5 million in 2025. Meanwhile, the Uber-backed group Citizens for Affordable Rates (CAR) is running a $7 million ad campaign in support of Hochul's proposals.

The numbers go beyond personal auto. Commercial auto premiums in New York have effectively doubled over the past five years, according to the Trucking Association of New York. Policies that previously cost $5,000–$6,000 per unit now commonly run $10,000–$12,000, and some New York City-area carriers report quotes as high as $50,000 per truck.

What Happens Next: Three Scenarios

With the April 1 deadline officially here, negotiations are happening behind closed doors among Hochul, Assembly Speaker Heastie, and Senate Majority Leader Stewart-Cousins. According to PIA Northeast's analysis, the absence of Part EE from the Senate's one-house budget doesn't mean the reform is dead — it means it has moved into the final negotiation phase, where the most consequential decisions are made.

Scenario 1: Reform is negotiated back in (partial or full). Hochul has said she believes there's still time to "negotiate it back in" with legislative leaders. A partial deal — perhaps the fraud-fighting and safe-driver discount provisions without the full damages cap — is the most politically viable compromise. If this happens, expect rate impacts to be visible at renewal starting in late 2026 or 2027.

Scenario 2: Reform fails in the budget but passes separately. Even if the budget doesn't include the reforms, they can be passed as standalone legislation during the regular session. This path would likely take longer — possibly into 2027 — before premiums actually drop.

Scenario 3: Reform fails entirely this year. If trial lawyers successfully block the measures, New York rates may continue rising, especially as tariffs on imported auto parts push repair costs higher in 2026. Some analysts expect another significant increase in NY premiums by 2027 if systemic issues go unaddressed.

What New York Drivers Should Do Now

Regardless of how the budget plays out, there are concrete steps you can take today to lower your premiums — without waiting for Albany to act.

Looking Ahead

Florida is the clearest comparable to New York's situation. After Florida passed landmark tort reform in 2023, the state's top five auto insurers are delivering an average 8% rate decrease for 2026 — the first sustained relief for Florida drivers in years. Hochul and reform advocates point to this as exactly what New York needs.

The next few days will be decisive. Budget negotiations in Albany are famously opaque and fluid — as PIA Northeast noted, April 1 is "more of a goal than a guarantee." Watch for announcements from the governor's office and check your next renewal notice carefully. If you're a New York driver seeing another double-digit increase, now is the best time to shop aggressively.

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