ALBANY – Because of a new state law, every driver in New York is poised to be automatically enrolled in expanded, more expensive auto insurance coverage.
That includes millions of unmarried motorists who would derive no benefit from the extra coverage, which allows an individual to sue their spouse for damages stemming from negligent driving.
The new law does not differentiate between unmarried and married New Yorkers.
In memos last year, insurance companies warned Gov. Kathy Hochul that roughly half the state’s driving population would be enrolled in insurance coverage from which it would not benefit. Hochul signed the bill into law in December, without insisting on narrowing that aspect of the bill.
New Yorkers may opt out of the added coverage, which, according to the state Department of Financial Services, costs anywhere from $20 to $84 annually.
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But opting out requires the consumer to be aware of the new law, contact their insurance company and sign a form declining the coverage.
Already, New Yorkers had among the highest auto insurance bills in the country. The new law was pushed through by groups representing state trial lawyers, who are among the most powerful interests in Albany.
Before the bill passed the State Assembly in May 2022, Republican Assemblyman Steve Hawley of Batavia argued that “attorneys will love this, because it creates another lawsuit,” where attorneys would gain a cut of the payout.
The law took effect on Aug. 1. When auto insurance is issued, renewed or modified in New York, companies must now add the supplemental coverage to a person’s plan and provide the consumer written notification of the addition.
Still, insurance companies worry that consumers may not notice, and that insurers will be blamed when customers do eventually notice higher premiums.
The chairman of the Senate Insurance Committee, Sen. Neil Breslin, sponsored the supplemental insurance bill in 2022. Breslin told The News this week, however, that he was potentially open to changing it.
“While I do feel that it is incumbent upon an insurance company and their agents and brokers to ensure that potential insureds have the best and most appropriate coverage to meet their needs, I certainly don’t want people unknowingly paying for coverage that would provide them no benefit,” Breslin said. “I would certainly be willing to discuss potential amendments to make the law more explicit in its application if necessary.”
What’s covered
The new law requires state insurance companies to enroll customers in “supplemental spousal liability insurance.”
When a driver is at fault for a car accident in New York, others who sustain a serious injury generally may sue the potentially negligent driver for damages, including pain and suffering.
But if the spouse of the negligent driver is injured, the injured spouse generally cannot sue their husband or wife, then recover money from their spouse's insurance policy.
The exception: If the driver had the “supplemental spousal liability insurance.” In that instance, the injured spouse may sue their significant other, who was driving, and seek insurance payment from the driver’s insurer for non-economic damages, including pain and suffering.
Under prior state law, insurance companies had been required to offer the supplemental coverage to policyholders. But the policyholder had to proactively opt-in to get the coverage.
In a memorandum last year, Geico urged Hochul to veto the bill. According to company data, less than half of its auto insurance customers in New York identified as being married. But under the bill, “no distinction is made among the individuals that must be provided this coverage,” wrote Jeremy Connor, vice president of operations for the Geico Cos.
“Even someone who wouldn’t qualify for this coverage because they are not married would be forced to carry it (and possibly pay more for it) if they did not take extra steps to reject this coverage – something they never had to do before,” Connor wrote. “This means that more than half of New York insureds could pay more to carry what would be a mandatory minimum coverage, when they are not eligible to benefit from it.”
The bill was also strongly opposed by the industry’s umbrella group, the New York Insurance Association. And Richard Creedon, chairman and CEO of Utica National Insurance Group, told Hochul that only 2% of his company’s customers had voluntarily opted into the coverage.
“Pervasive confusion will be created for those insureds who discover they were ‘forced’ into purchasing this coverage,” Creedon wrote in June 2022.
A Hochul spokesman, Justin Henry, noted that Hochul did insist on two amendments to the Legislature’s version: One moving the bill’s implementation date back to Aug. 1, the other making the bill expire in 2027, when the Legislature would have to renew it.
In the Democratic-controlled State Legislature, the bill was sponsored last year by the chairs of chambers’ respective insurance committees, Assemblyman Kevin Cahill and Breslin. Cahill, who lost a primary election last year, said on the Assembly floor in 2022 that spousal coverage was a “common sense” part of insurance, but that many people were unaware of it.
The bill passed the Assembly by a margin of 110-39, and more easily in the Senate, 60-3.
Lawyers’ lobbying
Two industry groups, the state Trial Lawyers Association and the state Academy of Trial Lawyers, lobbied in favor of the bill.
In a memo to Hochul last year, Academy of Trial Lawyers President James Hacker wrote that supplemental spousal liability insurance helped to fill a “gap in coverage for a very low cost.”
“Unfortunately, while supplemental spousal coverage is available, many people are unaware of it, don’t purchase it, and only find out that their spouse is uninsured when something awful happens,” Hacker wrote.
The trial lawyer groups did not respond to questions about how frequently such a scenario had occurred in the past.
The Trial Lawyers Association has long been among the largest donors to political campaigns in New York. Since the beginning of 2021, the group’s political action committee, LAWPAC, has donated about $1.5 million to state politicians on both sides of the aisle.
In 2022, the year the supplemental insurance bill was passed, LAWPAC gave the maximum $117,300 to the Assembly Democrats’ campaign arm, and since the beginning of 2022, nearly $100,000 to the Senate Democrats’ committee.
In November 2021, the Association gave the maximum $69,700 donation to Hochul’s campaign. In mid-2022, the group gave the maximum $117,300 to the state Democratic Party, which is closely aligned with Hochul.
Even without buying the supplemental insurance, spouses of negligent drivers do enjoy some protection from auto accidents. Regardless of who’s at fault for an accident, insurance plans in New York are liable for up to $50,000 per person for lost wages or medical bills.
But such minimum “no fault” insurance does not cover lawsuits alleging that a negligent driver has caused non-economic damages, such as pain and suffering.
In the past, trial lawyers groups also have favored other Albany legislation that automatically enrolls drivers in such “supplemental” coverage, opening the door for more lawsuits.
Hochul has not always agreed with the trial lawyers lobby, including her veto last January of the “Grieving Families Act,” a bill that allowed lawsuits to be filed for “emotional damages” caused by negligence. That bill was strongly opposed by a hospital industry lobbying group, which itself had donated $942,000 last year to the State Democratic Party.
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