Long Island drivers could see insurance rates dip by 10% under new reforms

Recently passed state auto insurance reforms could help lower car insurance rates as much as 10% for New York drivers, according to some estimates. That includes Long Island, where the cost to buy and maintain a vehicle is notoriously expensive.

Gov. Kathy Hochul's office has touted the reforms as part of a broader affordability push in her recently passed budget, as Long Islanders and others across New York struggle with rising costs of living. The nonprofit Citizens Budget Commission estimates the changes could shrink premiums as much as 10%, saving at least $200 per individual annually, and as much as $2 billion for New York residents and businesses, without any additional state spending. 

But while proponents have lauded the initiatives for tackling high premiums, others say the changes could prove harmful to injured crash victims. The measures take aim at high rates of insurance fraud that experts say have been driving up premiums, by strengthening penalties against fraudsters and tightening the legal definition of a "serious injury."

The reforms also ban using ZIP codes, occupation, education level or homeownership as primary rating factors — a change that could prove especially beneficial on Long Island, where some ZIP codes last year saw average six-month premiums soar as high as $2,460, said Beth Swanson, an insurance analyst at The Zebra, an insurance comparison company.

Historically higher premiums for Long Island "comes down to factors like rampant fraud, runaway litigation, high state minimums, brutal traffic congestion, and just a higher cost of living overall," Swanson said. The reforms take "direct aim at several of those root causes," she added.

State: Time to take down insurance fraud

In New York, insurance fraud and attorney representation in accident cases have played a significant role in driving up costs, said Tim Zawacki, an S & P Global Market Intelligence insurance analyst.

"New York ranks at the bottom of the country in terms of auto insurance profitability," Zawacki said, highlighting the state's legislative reforms as an initiative that could bring costs down.

New York ranks second in the nation for staged insurance fraud, with insurance carriers reporting 43,811 incidents of suspected fraud to the state last year, according to the governor’s office. That marks an 80% increase from 2020.

Recently, Uber Technologies and Liberty Mutual Fire Insurance Co. sued over eight allegedly staged hit-and-run accidents between August 2023 and March 2025 in Hempstead, Lynbrook, Valley Stream and Westchester County, Newsday has reported. 

FedEx also recently sued a Deer Park orthopedic spinal surgeon for allegedly conducting unnecessary surgeries on drivers and passengers involved in alleged staged crashes with the parcel carrier's vehicles, Newsday has reported. 

The New York Alliance Against Insurance Fraud estimates that insurance fraud costs New Yorkers an additional $920 per year in expenses. When fraud drives up insurance costs, that difference is reflected in prices for goods and services, like a cup of coffee, said Frank Sztuk, chair of the public outreach committee at the group.

The recently passed reforms crack down on all organizers involved in staged accidents, and by tightening the legal definition of a "serious injury," make it harder for clinics to charge for extra treatments or "overbill for minor injuries" to inflate claims, Swanson said.

Bad actors can now face serious criminal charges, she noted.

The legislation also caps damages for drivers who were involved in criminal behavior at the time of an accident, such as drunk drivers and people driving without insurance. 

Strengthening penalties against fraudsters will help people understand that committing fraud is "a criminal act," said Sztuk, who is also vice president of investigative services at Delta Group, a fraud management company.

"People see it almost as an entitlement," he said. "The story goes, 'I've been paying for insurance for all these years, and now is my chance to get a little bit of it back.' In reality, it's hurting everybody."

Laws to limit rate hikes

State reforms also include a mandate that if underwriting gains exceed projected profits by more than 5% over three years "that money must be returned to consumers through refunds or premium credits," Swanson said. To raise rates, companies must submit a data-backed request to the state for approval.

An insurer trying to increase an individual’s rates by more than 10% is legally required to send the driver a breakdown explaining why and how the cost increase was calculated, she said. And, when the state reforms start to lower auto bills, carriers must explicitly credit the state for the reduction. 

To cut down on legal expenses, the reforms also ban drivers who are 51% or more at fault for an accident from suing the other driver for "non-economic pain and suffering," and requires juries to determine who caused a crash before a lawsuit can move forward, Swanson said. 

Big I New York, a DeWitt-based business association representing independent insurance agencies in the state, praised the reforms in a statement last week.

"With these changes, we anticipate that New Yorkers will finally begin to see relief from some of the highest auto insurance costs in the nation," said board chair David Borg.

Ed Kizenberger, executive director of trade group the Long Island Autobody Repairmen’s Association, similarly highlighted the benefit of the reforms for Long Island consumers. Kizenberger said it’s too soon to tell how the reforms will impact auto repair shops.

"New Yorkers just want to pay fair insurance premiums and have reasonable service from their insurance provider, and I think this will benefit that," he said.

Legislation passed despite opposition

The legislation is not without its critics. The New York State Trial Lawyers Association has argued the reforms could hurt New Yorkers seriously injured in crashes, Newsday has reported.

In late April, the legal association highlighted a report from financial analysis firm Weiss Rating that found auto insurance carriers in New York closed nearly half of all auto liability claims without payouts to policyholders in 2025. That’s a 44% increase in denials over the past 20 years, the association said in a news release criticizing the legislative effort to limit claims and damages. 

Citizen Action of New York, which commissioned the report, criticized the state budget in a Friday statement, calling the legislation "a betrayal of working families."

"While New Yorkers are being drained for every dollar they have as car insurance costs climb, this budget took no meaningful action to hold profit-hungry car insurance companies accountable," said Carolyn Martinez-Class, co-executive director at the advocacy group.

Assemb. Latrice Walker, whose district includes parts of Brooklyn, criticized the auto reforms in a March op-ed published by City and State New York.

Part of the legislation now bars "injured people from recovering damages unless they can prove they were unable to perform most of their daily activities for at least 90 of the first 180 days after a crash," Walker wrote. 

That excludes "many seriously injured workers who return to work out of economic necessity," and targeting "working people — especially workers of color — by denying compensation to those who cannot immediately return to work after a crash," she wrote.