New York's 2026 fiscal year executive budget introduces a sweeping package of civil justice reforms aimed at curbing insurance fraud, reducing inflated motor vehicle claims, and addressing what policymakers characterize as systematic litigation abuse. Framed primarily as an affordability initiative to reduce rising auto insurance premiums, the proposals would, if enacted, significantly reshape liability exposure, damages recovery, and trial procedure in automobile litigation statewide.
Although negotiations remain ongoing and final statutory language is still subject to revision, the scope of the reforms signal one of the most consequential shifts in New York's tort landscape in decades.
Key Proposed Reforms
The administration has proposed narrowing the serious injury framework that governs access to non-economic damages in motor vehicle cases. Among the most closely watched changes is the anticipated elimination of the 90 out of 180 day category, long criticized by insurers and defense practitioners as susceptible to subjective proof and inconsistent application. A more restrictive threshold would likely reduce the volume of soft-tissue and marginal claims reaching juries and increase the importance of early dispositive motion practice.
Procedural Sequencing of Liability and Threshold Determinations
Another significant proposal would clarify that liability must be established before a jury considers whether the plaintiff has satisfied the serious injury threshold. This change is intended to resolve the longstanding split among the courts and streamline trial by preventing damages litigation where fault is not established. If adopted, the reform could shorten trial length, reduce expert costs, and alter settlement dynamics by focusing early litigation on liability exposure.
Limits on Recovery for Bad Actor Plaintiffs
The budget framework also contemplates restrictions on non-economic damages for plaintiffs engaged in unlawful conduct at the time of the incident, including individuals operating stolen or uninsured vehicles, driving while intoxicated, or committing crimes involving the vehicle. Such provisions reflect a broader policy shift toward conditioning recovery on lawful conduct and could materially reduce high-severity verdict risk in cases involving egregious plaintiff behavior.
Comparative Fault Bar
A proposed modification to New York's pure comparative negligence regime would bar recovery where a plaintiff is more than 50% responsible for the accident. This would align New York with the majority of states that apply a modified comparative fault standard and would significantly alter exposure analysis incases where the plaintiff bears the majority of the fault..
The repeal of CPLR §1602(6) would further limit the availability of joint and several liability in motor vehicle cases, potentially shifting greater responsibility to each defendant for its proportionate share of fault. The practical effect would be a redistribution of risk among co-defendants and insurers and could influence both indemnity strategy and settlement allocation.
Policy Context and Legislative Outlook
The proposed reforms are part of a broader state initiative focused on reducing insurance costs for consumers, with policymakers citing staged accidents, fraudulent medical billing, and high litigation expenses as primary drivers of premium increases. Industry stakeholders, including insurers and business groups, have expressed strong support, while plaintiffs' advocates have raised concerns regarding access to recovery for legitimately injured claimants.
As with prior New York budget negotiations, the final contours of the reforms may change substantially before enactment. Certain provisions could emerge as standalone legislation, while others may be narrowed or modified through the legislative process.
Implications for Insurers, Businesses, and Defense Counsel
If enacted largely as proposed, the reforms would reshape litigation strategy in several ways. Threshold challenges and liability determinations would take on increased significance at earlier stages of litigation. Exposure modeling may shift downward in cases involving high comparative fault or unlawful plaintiff conduct. Trial practice could become more streamlined, with reduced damages litigation where liability is contested.
At the same time, constitutional challenges and interpretive disputes are likely, particularly with respect to any comparative fault bar or damages limitations, suggesting a period of uncertainty as courts interpret the new framework.
Looking Ahead
Stakeholders should closely monitor budget negotiations and the possible implementing of legislation over the coming months. Early evaluation of pending claims under the possible new standards may help identify matters where exposure, reserve, or settlement posture could change if the reforms are enacted.
The team at Wood Smith Henning & Berman will monitor this legislation and provide updates as developments occur. Should you have any questions or concerns, please do not hesitate to reach out for further assistance.
To view the press release from the Governor's office in its entirety please visit: https://www.governor.ny.gov/news/money-your-pockets-governor-hochul-highlights-proposals-bring-down-costs-auto-insurance-rates.
