Positive News for New York Drivers: Insurance Surcharge Goes from $1,000 to $2,000

Automobile accidents in New York may not be as costly for insurance policy holders, thanks to recent legislation signed by Governor David Patterson. The new law amends Section 2335 of the Insurance Law, which limits insurance companies from levying surcharges on a policyholder after an auto accident involving property damage.
Section 2335 now prohibits insurers from raising auto premiums after an accident, unless the amount of property damage exceeds $2,000. The prior threshold was $1,000 and was in effect since 1991. Inflation and increasing repair costs made exceeding the prior threshold almost a certainty in any type of vehicle collision. Today's minor "fender benders" frequently exceed $1,000 in repairs. Lawmakers were concerned that New York is becoming the highest-cost state in the nation for auto insurance. The new legislation is intended to help contain premium costs by preventing auto insurance surcharges for minor accidents.

The new law drew praise from insurance agents, who noted that the prior

threshold often saddled policyholders with surcharges for every accident, even minor fender benders. A representative of the agents characterized the surcharges as "unreasonable" and "excessive." In some cases, the amount paid in surcharges over three years exceeded the amount of the original insurance benefit.

The new law does not prevent insurers from levying surcharges for accidents involving personal injury, regardless of the amount of property damage. The property damage threshold is tied to Section 605 of the Vehicle and Traffic Law, which sets the monetary amount of property damage that must be exceeded in order to require a report of the accident to the Commissioner of Motor Vehicles.