New York State Budget Tackles Auto Insurance Fraud

May 26, 2026, reforms were announced to bring down the costs of auto insurance rates and tackle fraudulent claims across New York State as part of New York State Governor Kathy Hochul's Fiscal Year 2027 Enacted Budget.

This reform is designed to battle fraud, limit damages paid out to bad actors, and ensure that consumers, not insurance companies, are prioritized, according to the announcement, which would make New York State more affordable and put money back into the pockets of the residents of the Empire State.

Governor Hochul noted that New Yorkers’ insurance average rates amount to just over $4,000 annually, which is about $1,500 above the national average. The reason for high rates for vehicles is blamed on a combination of fraud, litigation, legal loopholes, and enforcement gaps. Insurance fraud and staged crashes inflate premiums up to $300 a year, according to some estimates.

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Outdated laws, special interest loopholes and jackpot insurance payouts to bad actors have long forced New Yorkers to pay some of the highest car insurance rates in the nation. These hardfought reforms are a win for every New Yorker who depends on a car to go to work or drop their kids at school. But it’s bigger than that. I’ve heard from farmers who say these reforms will lower the cost of getting their goods to market and from construction supply companies who say this will lower the cost of building. This is how we are delivering on the promise to tackle the affordability crisis head on. - New York State Govedrnor Kathy Hochul

In addition, the Fiscal Year Enacted Budget also includes provisions that enable prosecutors to seek criminal penalties against any individual responsible for organizing a staged accident, not just the particular individual behind the wheel.

The reform includes:

• Limiting Damages for Individuals Engaging in Unlawful Behavior at the Time of an Accident
• Tightening the Serious Injury Threshold
• Limiting Damages for Individuals Who Are “Mostly” At Fault in Causing an Accident
• Applying stringent oversight on insurance companies' rates, preventing excess profits, and returning savings to consumers
• Ensuring Fair Rates for Drivers

For more information, visit the website of New York State Governor Kathy Hochul.