New York’s Fiscal Year 2027 (FY2027) budget law attempts to reform key aspects of the Empire State’s automobile insurance and tort system.
Supporters of the law tout the legislation’s efforts to reduce insurance fraud and costs. According to Governor Kathy Hochul’s office, New Yorkers pay an average of just over $4,000 per year for automobile insurance, or approximately $1,500 north of the national average. (The credit bureau Experian reports that, based on August 2026 data, full automobile insurance in New York runs on average $3,560 per year, or $297 per month. To have the minimum liability coverage required by New York law, vehicle owners pay average premiums of $2,914 per year, or $243 a month.)
For the reform’s proponents, part of the blame lies with staged automobile accidents and other instances of fraud on insurance companies. The New York Department of Motor Vehicles reports 1,729 staged crashes in 2023. According to the Insurance Information Institute, staged crashes cause on average a $300 increase in premiums. A report from the Coalition Against Insurance Fraud in 2022 placed the annual price tag for insurance fraud at $308.6 billion nationwide.
The FY2027 budget expands New York Penal Code Section 176.05’s definition of “fraudulent insurance act” to include the staging of motor vehicle crashes. Beyond criminal penalties for this form of insurance fraud, the FY2027 budget law limits the circumstances under which plaintiffs can recover for pain and suffering and other non-economic damages.
New York’s No-Fault Insurance in Review:
To understand the FY2027 budget bill’s impact on automobile wreck cases, it helps to discuss the essential concepts of New York motor vehicle tort and automobile insurance law.
Specifically, New York operates as a “no-fault” state with regard to motor vehicle crashes. A crash victim, regardless of fault, is entitled to recover up to $50,000 for economic losses — medical expenses and lost wages. The compensation does not come from the at-fault driver or such driver’s insurance. Instead, New York motorists must carry “personal injury protection (PIP)” coverage on their own vehicles of $50,000. Negligence by the victim does not reduce or otherwise affect recovery under PIP coverage.
Section 5104 of the Insurance Code limits personal injury lawsuits against an alleged at-fault driver to “serious injuries.” These are non-economic damages which include pain and suffering. The provisions of FY2027 we discuss here concern personal injury lawsuits, not claims under PIP “no-fault” policies.
No 90/180 Rule for “Serious Injury”:
Prior to the enactment of FY2027, plaintiffs in New York could recover for “serious injuries” against tortfeasors by applying the “90/180” rule. That is, it sufficed if a plaintiff had a medical condition that prevented the plaintiff from performing work or daily activities for at least 90 days during the first 180 days after the crash. The 90/180 rule allowed medical determinations to be based upon soft-tissue injuries and other temporary harm.
With the new Insurance Code Section 5102, a plaintiff seeking recovery for a “serious injury” must establish one of the following:
- Death
- Dismemberment
- “Significant disfigurement”
- Permanent or significant loss of function of a body part or system
- Loss of fetus
This definition eliminates subjective evidence as a basis for plaintiffs to prove “serious injury” in personal injury lawsuits.
Modified Comparative Negligence
Comparative negligence reduces a plaintiff’s recovery by the percentage of fault assigned to the plaintiff. In its purest form, comparative negligence does not completely bar relief for the plaintiff. By contrast, contributory negligence — followed in Alabama, the District of Columbia, Maryland, North Carolina, and Virginia — prevents a plaintiff from any recovery. It applies where any negligent act or omission on the plaintiff’s part, however slight, is a contributing factor in the wreck.
Section 1411 of the Civil Practice Law and Rules removes for motor vehicle cases the pure comparative negligence scheme. In its place lies modified comparative negligence. New York’s version of this doctrine prevents a plaintiff in a wreck case from recovering if that plaintiff’s negligence exceeds 50 percent. In other words, the plaintiff’s negligence may not exceed that of the defendant’s negligence in causing the crash. If a plaintiff stays below the 51 percent negligence threshold, the plaintiff’s recovery is allowed but is reduced by the percentage of the plaintiff’s negligence.
Note that pure comparative negligence still applies in other personal injury cases, such as premises liability.
Limits on the Amount of Non-Economic Damages
The automobile tort reform enactment caps non-economic damages at $100,000 for certain wreck victims. Specifically, a negligent or otherwise at-fault plaintiff (not barred from any recovery under the modified comparative negligence rule) falls under the cap if any of the following are true:
- The plaintiff operated an uninsured vehicle at the time of the wreck, unless the insurance was lapsed for less than thirty (30) days
- The plaintiff was driving while impaired at the time of the wreck and received a conviction of driving while impaired
- The plaintiff wrecked while committing a felony or fleeing the scene of a felony or apprehension for the felony and received a conviction for it
New York law requires that vehicle owners carry liability insurance of at least $25,000 per person injured or $50,000 for two or more victims. The required minimums for wrongful death liability coverage stand at $50,000 per person or $100,000 per wreck (where two or more victims die in the crash).
This cap on non-economic damages does not apply to a plaintiff who is not at fault in causing the wreck. Further, the statute excludes wrongful death actions from the non-economic damages cap of $100,000.
