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Why Does Auto Insurance Cost So Much in New York State?

November 29th, 2023 | 5 min read

By Daniel J. Middleton

New York City accidents help drive up insurance rates.

Auto insurance costs are very high in New York State. Many drivers hate to see how much they have to pay every year. You may be among those who wonder why New York has some of the most expensive car insurance in the country.

We’re Horan, a local agency that specializes in car insurance. We know how hard it is to afford the coverage that New York requires. We also know how confusing it is to understand what makes the rates go up every year.

In this article, we’ll show you the main reasons why car insurance costs so much in New York. We’ll also show you what you can do to offset those costs.

No-Fault Insurance Laws Increase Car Insurance Costs in New York State

New York drivers pay high auto insurance costs because of the state’s no-fault insurance laws. These laws require drivers to have personal injury protection (PIP) coverage. PIP covers medical bills for anyone hurt in an accident, no matter who caused it. Only 12 states have this kind of insurance.

The no-fault system was supposed to reduce fraud and lawsuits. Before, people could sue the driver who caused the accident for their medical expenses. Some people took advantage of this and staged fake accidents with false witnesses and doctors.

However, the no-fault system did not lower the premiums for drivers. The three most expensive states for car insurance are 

  • New York
  • New Jersey
  • Michigan

And they all use the no-fault model. New York drivers still have to pay a lot of money to drive legally.

How no-fault insurance works in CNYInsurance Companies Cover High Medical Bills for Careless Drivers

No-fault laws mean insurance companies pay for medical bills no matter who caused the accident. Sometimes, safe drivers have to pay more because of other drivers’ mistakes.

Let’s say a driver is very careless. They have many tickets, a DUI, and a history of accidents. They pay a high premium of about $3,000 a month. One day, they run a red light and hit another car where US-11 and NY-31 routes intersect in Cicero, New York. 

The other car has a driver who has never had an accident and has a low premium. The other car also has the driver’s family and a friend inside. 

Everyone in the other car is hurt, but they did nothing wrong. Yet, their insurance company pays for their medical bills but, at renewal, might raise their premium. This isn’t fair, but it’s how the no-fault system works.

No-fault laws mean that insurance companies pay for medical bills and lost wages for anyone hurt in an accident. It doesn’t matter who caused the accident or who was in the car. But this also means that safe drivers have to pay higher premiums even if they are not at fault.

Some people try to cheat the system by pretending to be more hurt than they are. 

An example of this is someone having a minor injury that heals in two weeks. But they go to the doctor for months and get more treatments than they need. The insurance company has to pay for all these extra bills. And those expenses pass to you as a higher auto premium.

Personal Health Insurance Restriction Drives Up Auto Insurance Costs

Another problem is that people can’t use their own health insurance after a car accident. They have to use their auto insurance first. So if they have a good health plan that covers a lot of things, they can’t use it. They have to use their auto insurance, which may not cover as much. This also adds more costs to the insurance company. 

And again, the premiums go up for everyone.

Some people might think that New York should have cheaper health insurance rates. Since auto insurance pays for injuries from car accidents, health insurance doesn’t have to, right? But New York still has very high prices for both auto and health insurance.

The Market Effect on Auto Insurance Rates

Another reason why car insurance is expensive in New York is the market. 

People who buy used cars in New York prefer cars that haven’t been driven in the snow and salt. They look for cars that have been used in warmer places. They think these cars are in better condition. So sellers can charge more for them. 

This also affects the car insurance prices.

Leading causes and solutions for high auto insurance costs in NYS.

The Impact of Winter Weather on Car Accidents and Insurance Rates

Then there’s the weather. 

New York has cold winters with a lot of snow and ice. The roads get salted to melt the snow, but the salt damages the cars. It makes them rust and break more easily. 

Say a car has been driven in New York for 14 winters. it might have a weak axle that can’t handle a bump in the road. A car that has been driven in a warmer place might not have this problem.

The weather in New York makes car accidents more likely. The roads are slippery and dangerous because of snow, ice, and animals. Even if the roads are cleared, some drivers don’t slow down or drive carefully.

The Group Rate Effect on Auto Insurance Costs

More accidents mean higher car insurance costs for everyone in New York. It doesn’t matter where you live in the state. The insurance companies treat the whole state as one group.

This isn’t good for drivers who live far from New York City. 

They have to pay more because of the accidents that happen in the city. They have no control over what city drivers do. So the weather and the group rates make car insurance expensive in New York overall.

New York City has more car problems than the rest of the state. There are more accidents, thefts, and claims in the city. But the insurers don’t charge only the city drivers more for these reasons. They charge everyone in the state more.

They do this to make the prices fair. If they only charged city drivers more, those drivers would throw a fit. So the insurance companies mix the city and the country drivers together. Insurance costs more in the lower part of the state, but the insurance companies reduce the impact by sharing some of the risk with the rest of the state.

This is different from other states that don’t have a big city like New York. North Carolina, Tennessee, and Kentucky, for instance, lack a New York City-level metropolis. So risks remain lower in these states, and car insurance prices are more consistent. They don’t have to mix different areas together.

Ways to Combat These High Auto Insurance Costs

High auto rates can be a burden for many drivers in New York. But there are some solutions that can help you save money on your car insurance. Here are some of them: 

  • Take a defensive driving course. This can reduce your traffic points and lower your insurance rate by 10 percent for three years. You can find an approved course online or in a classroom.
  • Maintain a safe driving record. This can help you avoid accidents, tickets, and claims that can increase your premiums. Many insurance companies reward safe drivers with discounts and lower rates.
  • Add safety features to your car. This can help you prevent or reduce damage from accidents, theft, or fire. Insurers may give you a discount if you have safety features such as warning sensors, alarms, or tracking devices.
  • Bundle your policies or shop around. This can help you get a better deal on your car insurance if you also buy other types of insurance from the same company, such as home, renters, or umbrella policy. Insurance companies may give you a multi-policy discount if you bundle your policies. But sometimes you can save more by not bundling.

Get Tailored Auto Insurance That Fits Your Lifestyle

Car insurance prices aren’t simple. They depend on many things. Some you can control, but some you can’t. Some of these factors are state laws, the weather, accidents caused by other drivers, and New York City driving habits.

What does this mean for Central New York families struggling with high premiums? 

Read our companion article to learn more ways to save money on auto insurance.

At Horan, we strive to tailor policies that safeguard you for risks you can manage while buffering elements that drive up costs.

We’re ready to explore discounts you qualify for and add coverage that meets your situation.  We aim for Central New Yorkers to make informed decisions, activate savings, and protect what matters most. All this despite marketplace challenges.

We're here to help make the policies and prices fit your life.

If you’re ready to get things started, click the Get a Quote button below. One of our friendly agents will contact you to discuss your options.

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Daniel J. Middleton

Daniel is an accomplished content creator. He has been working in publishing for almost two decades. Horan Companies hired Daniel as its content manager in November 2022. The agency entrusted its messaging to him. Since then, Daniel has written insurance articles, service pages, PDF guides, and more. All in an effort to educate CNY readers. He's helping them understand the world of insurance so they can make informed decisions.