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Why Car Insurance Costs Are Rising for New York Drivers

by Cedric Guzman

New York State’s Auto Insurance Policies: What You Need to Know

Auto insurance is something that most of us may not pay much attention to until we need it. However, if you live in New York State, it’s essential to take a close look at your policy, as you may have been enrolled in new coverage that you may not even need.

A state law that went into effect on August 1 requires all auto insurers to include a new line of coverage called supplemental spousal liability insurance for all drivers, including those who are unmarried or buying coverage for a business. This means that even if you don’t have a spouse or are not married, you might still have this additional coverage automatically added to your policy.

But before you worry, there’s good news. Policyholders have the option to opt out of this coverage by notifying their insurance company in writing. This is particularly important for singles, as they may not benefit from this coverage. Additionally, opting out may also make sense for many businesses.

So, what exactly does this new supplemental spousal liability insurance cover, and why would married people want to keep it? Well, all drivers and passengers, including spouses, already have access to “no-fault” coverage in New York. This coverage pays up to $50,000 for medical care and wage loss, regardless of who was at fault in an accident.

However, if a driver causes an accident that seriously injures their spouse and the medical expenses exceed the limits of the “no-fault” coverage, the supplemental spousal liability insurance can come into play. It allows the injured spouse to seek a bigger payout by filing a lawsuit to prove that the driving spouse was at fault. While this situation may be rare, personal injury lawyers and proponents of the law argue that it’s necessary to provide coverage for such cases.

On the cost front, the supplemental spousal liability insurance will vary based on several factors but is generally expected to be around 5% of the bodily injury premium. For most policyholders, this translates to roughly $20 to $84 annually. However, it’s important to note that premiums may have already risen more than expected due to the implementation of this coverage.

It’s worth mentioning that the insurance industry did not support this law change. They believe that opt-out mechanisms can lead to greater confusion. New York is also an outlier in this regard, as most states do not have a statute mandating this coverage. However, some states may still allow spouses to sue each other and recover damages.

If you’re a New York State policyholder, it’s important to review your auto insurance policy and consider whether you need the supplemental spousal liability coverage. If you decide to opt-out, make sure to notify your insurance company in writing. The change took effect on August 1, so it’s crucial to take action if you haven’t done so already.

The New York Department of Financial Services provides a declination form on its website, but your insurer should also send you a form that allows you to decline the coverage. If you are unable to opt-out even after contacting your insurer, you can file a complaint with the Department of Financial Services.

It’s worth noting that the Legislature is examining whether they should narrow the law in the coming legislative session. The law is set to sunset on July 31, 2027. The aim is to ensure that policyholders are not paying for coverage that provides them zero benefit under any circumstances.

In conclusion, New York State’s new auto insurance law requires all drivers to have supplemental spousal liability coverage, even if they are unmarried or buying coverage for a business. While this coverage may not be necessary for everyone, it can provide additional protection in certain situations. Policyholders should review their policies, consider their needs, and opt-out if they do not require this coverage.

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