In her State of the State address today, Governor Kathy Hochul took aim at one of the biggest—and most overlooked—drivers of New York’s high cost of living: auto insurance.

During her address, Governor Hochul said “New Yorkers pay the highest auto insurance rates in the nation, averaging $4,000 a year, $1,500 more than the national average…Because of rampant fraud and runaway litigation costs are jacking up the prices…We’re putting the brakes on fraud, a system that rewards illegal behavior. And if you are… committing a felony at the time of the crash, you should not get a payday. This is about finally standing up for millions of New York drivers who deserve a break.”

Governor Hochul highlighted insurance fraud and abuse as major contributors to rising rates. Staged car crashes are the most visible example. According to Newsday, New York recorded 1,729 staged auto accidents in 2023, the second-highest total in the nation, and insurers reported 38,270 suspected cases of motor-vehicle insurance fraud that year. Industry estimates suggest fraud adds up to $300 a year to the average driver’s insurance bill.

But staged crashes are only part of the problem. The Governor’s proposal reflects a broader effort to rein in a system that too often rewards bad actors through excessive litigation, fraudulent medical claims, and loopholes that drive up costs for law-abiding drivers.

Her plan calls for stronger coordination among State Police, financial regulators, the DMV, and prosecutors to crack down on fraud across the board. It also includes common-sense legal reforms, such as limiting non-economic damages for drivers who are mostly at fault or engaged in criminal behavior at the time of an accident.

Details on Governor Hochul’s plan can be viewed here. 

PACT has drawn attention to the staged accident crisis in New York, including an episode of the Consumer Talk video series and blog posts highlighting various fraud schemes across the state. 

PACT has long raised concerns about how insurance fraud and abuse inflate premiums for New Yorkers. Governor Hochul’s announcement makes clear that meaningful relief will require systemic reform—not just targeting one type of scam, but fixing the incentives that allow costs to spiral.

New York drivers are paying far too much for auto insurance, and Governor Kathy Hochul is right to take on the broken system driving those costs.