Governor Cathy Hochul has made a commitment to help drivers reduce their auto insurance costs by modifying state laws related to personal injury lawsuits. However, prominent attorneys are determined to oppose any such changes.
Hochul has expressed her intention to implement reforms that address the rising costs of auto insurance, emphasizing that New Yorkers, on average, pay around $4,000 annually—$1,500 more than the national figure.
Nevertheless, her proposal to redefine the state’s ambiguous “serious injury” standard—aimed at cutting down on trivial lawsuits—has caused significant backlash from the New York State Trial Lawyers Association, a powerful lobbying organization that contributes heavily to Democratic officials.
The association stated, “Reducing protections for victims will ease the financial strain on major insurance firms, yet it will worsen the burden of insurance costs for everyday families.” They have also released a video featuring Hochul alongside Florida Governor Ron DeSantis criticizing excessive lawsuit expenses.
“The notion that insurance companies will, out of the blue, take the moral high ground and lower their premiums is frankly absurd,” they continued. “New Yorkers see right through this. These are the same companies that annually increase our premiums, report record profits, and still manage to influence regulators.”
The existing legal interpretation in New York regarding “serious injury” is quite vague; it can even encompass relatively minor injuries that might put someone out of work for a brief period. Hochul aims to introduce “objective and fair medical standards” to better define what a serious injury is.
She mentioned that the lack of a clear definition has allowed some individuals to exploit the system in hopes of large financial awards in court. New York employs a “comparative fault” system for accident liability, allowing even the most negligent party to claim damages, including non-economic ones.
During her recent State of the State address, Hochul accused insurance companies of unfairly “inflating premiums” due to fraud and excessive litigation expenses, vowing to target these issues and reduce premiums.
“It’s essential to understand how this works,” Hochul remarked. “When the system allows for unchecked payouts, those costs eventually come back to you as increased monthly bills.”
“New Yorkers shouldn’t have to pay more for the same insurance, and this year is the time for change,” she insisted. “We will combat fraud and eliminate systems that reward unlawful behavior. If someone is driving under the influence or without a license during an accident, they shouldn’t be entitled to payouts.”
While the association is open to “reasonable measures” to deter fraud and combat the tactics insurance companies use to delay claims, they firmly oppose changes in liability standards. They argue that such alterations could backfire, congesting the courts further while benefiting only large insurance providers.
Hochul’s reform initiative proposes capping non-economic damages for individuals who engage in criminal acts during incidents. It would also prohibit uninsured drivers who breach the state’s financial responsibility laws, as well as those convicted of impaired driving or fleeing the crime scene.
Additionally, her proposed legislation would empower prosecutors to seek criminal charges against anyone involved in staging accidents, not merely the driver.
The Litigation Reform Alliance has commended the governor for addressing fraudulent premium increases and personal injury awards.
According to LRA Executive Director Tom Stebbins, tackling rampant fraud and the negative incentives within New York’s current law could lead to more affordable insurance and safer roads. He highlighted that sophisticated fraud rings are enlisting immigrants and homeless individuals as drivers for arranged accidents, subjecting them to futile medical procedures designed to inflate their insurance claims.
