Why is Car Insurance So Expensive in New York?

Several factors contribute to New York’s higher-than-average car insurance rates, some statewide and some more specific to NYC.

No-fault insurance system

New York uses a no-fault system for car insurance, which is only used by 11 other states. In no-fault states, each driver in an accident is responsible for their own medical expenses regardless of fault. This differs from at-fault states, where the driver who caused the accident is responsible for the other party’s medical expenses.

No-fault systems tend to result in higher statewide rates since insurers are taking on added risk even if their policyholder is a safe driver, and drivers are required to carry personal injury protection as part of their coverage.

High population density & risk of traffic accidents

NYC is the most densely populated city in the U.S., and although many New Yorkers don’t own cars, it still experiences extreme traffic congestion. Like in any major city, these conditions lead to more accidents and more claims, which drives up costs.

High rates of fraud

Insurance fraud is unfortunately quite common in New York, in large part due to the no-fault insurance law. There were 1,729 staged crashes in New York in 2023, which was the second-highest number of incidents in the country.¹ High rates of fraudulent claims lead to insurers raising their rates to help cover the money lost in wrongful payouts.

Jury awards

New York has some of the largest claim sizes and payouts in the country, which increases costs for insurers that are then passed on to consumers.²

Repair costs

Auto repair costs have been increasing across the country, and NYC’s particularly high cost of living also translates to auto repairs. The more expensive it is to have car repairs done, the more insurers have to pay out, which leads them to increase premiums.

Weather risks

Extreme weather conditions, including flash floods, have become more common in New York, which increases risk to insurers.³

In response to high car insurance rates in New York, which are likely to continue increasing, New York Governor Kathy Hochul has proposed legislation to help bring down costs and get insurance fraud under control. The following is a high-level overview of her main proposed efforts:

• Fighting insurance fraud, which will include leveraging the State’s Motor Vehicle Theft and Insurance Fraud Prevention Board and increasing prosecutions of those participating in fraud, as well as strengthening enforcement against garaging fraud.
• Increasing the timeframe insurers have to report fraud, which is currently only 30 days.
• Limiting payouts for non-economic damages for those engaging in illegal behavior at the time of an accident, as well as for those who are deemed “mostly” at fault in an accident.
• Reforming the serious injury threshold to set a clearer definition of what qualifies as a serious injury and limit unnecessary litigation and claims.
• Reforming joint and several liability so that in personal injury cases related to auto accidents with more than one defendant, each defendant who is less than 50 percent at fault would only be held responsible for the damage they caused, and not the full amount.
• Requiring insurers to notify policyholders of the reason behind any rate increases.
• Incentivizing safer driving by requiring insurance companies to offer discounts to drivers who voluntarily opt into programs that have been shown to reduce unsafe driving.

While these reforms have not yet been passed into law, they represent an important step and indicate that the state government is making it a priority to help lower car insurance rates across the state. This proposed legislation won’t be a silver bullet, but it stands to make an impactful long-term difference in New Yorkers’ auto insurance premiums.

The average cost of full coverage car insurance in NYC is 83 percent more than the New York statewide average. NYC drivers may find the best rates from Progressive and USAA (if eligible), but the following companies all have below-average rates in the city, according to our data.

New York is known to have stricter insurance regulations than most other states, which are meant to protect consumers, but can also have unideal side effects.

Pay-Per-Mile Options Are Unavailable

Frustratingly, pay-per-mile car insurance policies are not available in New York State. The state’s regulations dictate specific rules for how insurance rates are calculated and are not conducive to these types of policies. This is particularly unfortunate for NYC dwellers, many of whom drive less than average if they own a car at all.

However, while pay-per-mile policies aren’t an option, some car insurance companies, like State Farm, offer low-mileage discounts for drivers who drive fewer than a certain number of miles per year. It’s worth asking about when you get quotes if you don’t frequently use your car. In addition, certain telematics programs take into account your miles driven when calculating your driving score.

Rideshare Insurance Not Offered in NYC

Rideshare and delivery gig work is popular in NYC, but it’s made more complicated by the city’s unique Taxi & Limousine Commission (TLC) regulations. Rideshare drivers generally need to get rideshare coverage, which is a special endorsement added to their personal auto policies that provides additional coverage when working for Transportation Network Companies (TNCs) like Uber or Lyft.

However, this type of rideshare coverage is no longer available from most companies in New York State, and it’s not available at all in NYC. Rideshare drivers are instead required to purchase TLC insurance, which is essentially commercial auto insurance and requires minimum liability limits of 100/300/100. This coverage is more expensive than rideshare endorsements, making it a higher barrier to entry for rideshare drivers in the city. The same strategies apply to commercial policies in terms of getting lower rates, which we’ll cover in more detail below.

While New York has high insurance costs as a baseline, it’s possible to find below-average rates. The following strategies will help you do so:

• Shop around: While average premiums are useful as a starting point to compare companies, you may end up getting the cheapest rate from an unexpected provider. Always get quotes from at least three different companies, making sure to request the same amount of coverage, to see who offers you the best deal. It’s also a good idea to continue shopping around regularly.
• Drive safely: Violations on your driving record can significantly increase your rates — New York drivers with a DUI pay an average of 34 percent more than drivers with clean records. Avoiding violations will help keep your rates as low as possible. Even if you already have a violation, try to avoid more. They generally stay on your record for three to five years, so the safer you drive, the sooner you may see lower rates.
• Raise your deductible: If you have full coverage insurance, you have separate deductibles for your collision and comprehensive coverages. By increasing your deductibles, you’re essentially taking some of the risk away from the insurer, which will in turn lower your premium. Just make sure you can afford to pay the deductible out of pocket if you need to file a claim.
• Improve your credit: New York allows insurers to use credit history as a rating factor for car insurance premiums, and having poor credit can increase your rates by an average of 100 percent. Working to improve your credit will help you lower your rates over time.
• Look for discounts: Another great way to lower your car insurance premium is to look for discounts you may be eligible for. There are many common discounts that New Yorkers may be able to take advantage of, including for bundling policies, being a safe driver, taking a defensive driving course, and being a good student.
• Participate in a telematics program: Most insurers offer telematics programs, which track your driving habits via a mobile app and provide a discount based on your driving score. These programs track driving behavior such as your speed, hard braking, acceleration, and phone use. You may be eligible for discounts of up to 40 percent, depending on the insurer.

New York drivers face some of the highest car insurance costs in the country, driven by the state’s no-fault system, dense traffic, and other factors. Car insurance in New York, and particularly NYC, is probably never going to be “cheap.” That said, efforts are being made by Gov. Kathy Hochul and her administration to reform the state’s car insurance laws and target insurance fraud to help get prices under control.

In the meantime, New Yorkers can find affordable car insurance by comparing multiple quotes, understanding their coverage needs, taking advantage of discounts and telematics programs, and navigating unique challenges such as limited rideshare and pay-per-mile options in NYC.