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Reforming New York No-Fault Law

Reforming New York No-Fault Law

Tuesday, September 7th, 2010

This year, the New York legislature passed a bill that increased the property damage threshold for accident surcharges. Automobile insurance companies may not assess a surcharge on premiums unless the damage to property in an accident exceeds $2,000. According to Professional Insurance Agents (PIA), the most recent increase to the threshold was in 1991, when the bar was raised from $600 to $1000.

Since even a minor fender-bender can result in over $1,000 in damage, nearly all car accidents could result in surcharges before the recent change. Moreover, New York drivers arguably bear the burdens of the state’s no-fault insurance system, at least indirectly. The American Insurance Association (AIA) claimed in a recent news release that no-fault claim costs in the state have increased by 58 percent since 2004, and no-fault fraud and abuse in New York is costing insurers and drivers more than $200 million per year. Soaring costs have both insurers and drivers calling on the legislature for reform.

New York No-Fault

In New York, though not a pure no-fault state, an individual’s own insurance policy provides protection and coverage regardless of fault. Insurance companies in New York are responsible for payment for economic damages such as medical bills and a percentage of lost wages. Nonetheless, if the insured meets a certain threshold, he or she may also be able to sue for noneconomic, or general, damages. Only those who have suffered certain serious injuries or death are permitted to sue negligent drivers for general damages.

Potential Reform

Ellen Melchionni, president of the New York Insurance Association (NYIA), reportedly stated that New York City civil courts receive over 200,000 no-fault filings a year. She cited 2008-2009 and 2009-2010 budget requests to show an increase of 100 percent in filings during that time period.

According to the National Underwriter, industry representatives are calling for increased penalties for accident fraud and greater use of claims arbitration. The Independent Insurance Agents and Brokers of New York would like:

  • Legislators to make solicitation of participation in accident fraud a felony
  • To require a firm medical protocol or utilization review for no-fault claims
  • Mandatory arbitration for disputed no-fault claims
  • New burden-of-proof requirements for no-fault claims

Drivers and passengers who have been injured in a car or truck crash should contact a personal injury attorney to protect their right to recovery under New York’s no-fault law and to enforce their rights in court, if necessary.
Category: Car Accidents
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