After bypassing the April 1 deadline and engaging in weeks of debate and compromise, New York lawmakers have agreed on a $268.5 billion budget that includes auto insurance reforms championed by Gov. Kathy Hochul that are intended to reduce auto insurance costs for drivers and businesses.
The auto insurance reforms target fraud, “runaway” litigation, legal loopholes, non-economic damages and enforcement gaps in an effort to lower insurance costs. They are key parts of a $268.5 billion budget for the 2026-2027 fiscal year that seeks to tackle rising insurance, energy, housing, childcare, education and other everyday costs for New Yorkers.
The new budget is $14 billion more in total spending than the 2025-2026 budget. The new budget does not raise income or statewide business taxes.
The insurance measures include a cap on non-economic damages for drivers engaging in criminal behavior, a clarification of what constitutes a “serious injury,” changes to comparative negligence law and a crackdown on those responsible for organizing staged accidents.
The budget also has consumer protection measures prohibiting auto insurers from basing rates on homeownership status, occupation, education level or zip code; mandating insurers provide policyholders with explanations of why their premium increased; and requiring insurers to return any “excess profits” to policyholders.
Estimated Savings
A study by the Citizens Budget Commission (CBC) found the provisions should reduce a New York driver’s premium by about 10%. CBC, insurers and other supporters of the reforms have cited the success that Florida, Michigan and other states have experienced with similar reforms.
According to CBC and the Hochul administration, New Yorkers’ auto insurance premiums are among the highest in the country. The average premium in New York in 2023 was $1,896, 32% higher than the national average, 12% higher than New Jersey, and 51% higher than Illinois.
Yet, CBC has noted, despite those high rates, insurance companies have continued to lose money on New York’s auto policies—particularly on liability claims. In 2023, insurers lost 17% on auto insurance in New York after expenses.
The budget was supposed to be ready by April 1. But state lawmakers passed multiple deadline extensions to keep the government functioning until they and the governor could come to an agreement on its many details. Hochul had claimed three weeks ago that her office and lawmakers had agreed on the major policy issues including her auto insurance reforms. However, legislative leaders countered that there was no budget agreement yet because money issues were still to be decided.