New York's affordable housing developers are no longer quiet about what's driving their insurance costs through the roof. At a recent Ariel Property Advisors event, Bryan Kelly, principal at Gotham Organization, told attendees he has seen insurance rates on affordable housing projects consume ten percent of total development costs, roughly four times what developers pay in neighboring states.
Elizabeth Crowley, president and CEO of the Building Trades Employers' Association, pointed to the real culprit behind high insurance rates: "I think that the law is ripe for fraud and abuse."
Crowley was equally clear that a proposed publicly-backed insurance program from the city's administration misses the mark: "It's not the insurance companies that are the problem." The problem is the volume of claims, driven by a legal environment that invites exploitation.
The data backs her up. According to an analysis by the Milford Street Captive Insurance Company and LegalClaims.ai, affordable and rent-stabilized apartments represent just 20 percent of New York City's multifamily buildings, yet drew 56 percent of all personal injury lawsuits filed over the last five years, making them three times more likely to be sued than market-rate buildings. Robert Nelson of Nelson Management Group shared a firsthand example at the same event: his company was sued over a stairwell fall 18 months after the alleged incident, went to court, and lost, leaving a $3 million bill on the table.
New York's real estate industry is calling for reform of the Scaffold Law and broader legal changes at the state level. The proof that reform works is not far away. Florida enacted meaningful lawsuit abuse reform and saw GEICO, Progressive, and State Farm file for auto insurance rate reductions between 6% and 10.5%. Georgia was removed from the American Tort Reform Association's "Judicial Hellholes" list entirely in 2025 after passing sweeping reforms. The same lawsuit abuse cycle that is strangling New York's affordable housing market is hurting consumers across the country, and the solution is the same everywhere: reform the system, and costs come down.
New York lawmakers should follow the lead of states that have acted. The families who depend on affordable housing cannot afford to wait.