Research
Spotlight: Affordability Models for New York’s Car Insurance Industry
January 22, 2026
Introduction
New York state residents pay the highest average auto insurance premiums in the nation. This briefing builds on our Sep. 2025 report on the cost of litigation and other factors influencing affordability by highlighting some factors that impact auto insurance rates in New York and identifying solutions from other states for New York to consider.
$1,773: Average annual cost of minimum coverage in New York as of January 2026
25% higher than New Jersey
67% higher than Florida
94% higher than California
Several factors inflate New Yorkers’ auto insurance rates, including:
Third-Party Litigation Funding
Third-party litigation funding (TPLF) is a method of litigation financing where finance companies or wealthy individuals advance loans to plaintiffs or lawyers to pay the cost of suits in exchange for proceeds. This has prolonged cases, encouraged speculative lawsuits, and increased litigation costs. The Council of Insurance Agents and Brokers has found that TPLF was responsible for a 57% increase in U.S. liability claims between 2014 and 2024.
No-Fault Insurance
No-Fault insurance enables drivers and passengers in an accident to obtain benefits up to $50,000 per person through personal injury protection, regardless of fault. New York is only one of 12 states that maintain this. Instead, most states use comparative negligence, in which individuals can only sue if they were <50% at fault in an accident. In 2024, 93% of health care fraud and 75% of all fraud reports received by New York’s insurance regulator were related to No-Fault insurance.
Nuclear Verdicts
Nuclear verdicts are jury awards for injuries in excess of $10 million. New York ranked second only to Florida for the most nuclear verdicts between 2013 and 2022, and awarded $4 billion to injured parties during this time, 20% of which were for auto accidents. New York state does not have a cap on damages awarded for “pain and suffering,” and judges have begun deviating from the de facto $10 million limit.
Several states have reduced their auto insurance rates through regulation. These actions can serve as models for New York.
Ohio, Florida, and Michigan’s auto insurance regulations are useful frameworks for New York. In 2019 and 2023, respectively, Michigan and Florida overhauled their insurance and tort systems to reduce litigation and make the auto insurance industry consumer-friendly. Ohio routinely ranks in the top five of lowest auto insurance rates in the nation (the only state in the top five with a population over 2 million).
Ohio: 4th lowest annual auto insurance rate in 2026
Florida: 6.5% decrease in statewide auto insurance rates in 2025
Michigan: 15% decrease in statewide auto insurance rates between 2013 and 2023
The chart below illustrates the policies and regulations each state has in place.
Recommendations for New Yorkʼs auto insurance reform:
Replace No-Fault insurance with a comparative negligence model
Cap payouts on pain and suffering damages to negate nuclear verdicts
Reform damages paid to amounts paid by an individual and insurance company, rather than the amount billed by a medical provider
