Research
Excessive Litigation Is Driving New York’s Affordability Crisis
September 9, 2025
Overview
New York is the most expensive city in America. A major contributing factor to the city’s affordability crisis is the prevalence and high cost of litigation. The most direct consequence of excessive litigation is that New Yorkers pay insurance premiums that average 15% higher than the rest of the country, ranging from 12% higher premiums for health insurance to 52% higher premiums for auto coverage. The cost and availability of insurance is cited as the second biggest cost-related concern after labor costs in a recent survey of bar and restaurant owners conducted by the New York City Hospitality Alliance.
New York laws encourage outsized jury awards and settlements, exorbitant attorney fees, staged accidents, and fraud. New York has the second-highest cost of litigation and claims paid (“tort costsˮ) in the nation — over $7,000 per household, 67% above the national average ($4,200). Only Delaware has higher tort costs per household ($8,000).
Residential rents and prices for consumer goods and services would all be more affordable if New York brought its litigation costs in line with other states. Small businesses that can least afford the costs of compliance and legal representation are frequent targets of frivolous litigation brought under private rights of action that New York lawmakers rely on as their primary enforcement mechanism. Local government, which is often self-insured, ends up paying enormous claims and settlements, with costs passed on to taxpayers. This report describes some laws and policies that have contributed to New York’s affordability challenges and urges the public to demand reform.
Key Takeaways
New York will never solve its affordability crisis without taking on special interests that directly or indirectly are responsible for the high costs of litigation:
Insurance is a highly regulated industry, making it relatively easy to identify the laws and regulations that contribute to costs largely passed on to consumers, businesses, government, and nonprofit institutions.
Addressing these issues does not require eliminating protection or weakening accountability. Rather, it calls for thoughtful, targeted reforms that bring New York’s legal standards in line with national norms while maintaining appropriate safeguards.
Steps such as modernizing liability statutes, increasing transparency in litigation financing, and discouraging fraudulent claims can help reduce excessive costs without compromising fairness or safety.
Improving the state’s legal and insurance climate is not a standalone solution to New York’s affordability challenges, but it is a necessary component.
