Car insurance rates in the US surged by 19%, the highest increase since 1976, with Florida being the most expensive state due to losses from Hurricane Ian. In New York, a new law mandates supplemental spousal liability insurance, causing a spike in premiums despite an option to opt-out.

5fcf26d3-e085-4fef-a901-fae6643babea-auto-insurance-in -new-york.png

Recent data reveals that car insurance rates in the United States have seen their most significant annual increase since 1976, with a nationwide surge of 19% compared to the previous year. While this jump affects drivers across the country, Florida, a state prone to extreme weather events, faces even steeper rises in insurance costs. In this article, we explore the reasons behind this surge in car insurance rates and its potential impact on policyholders. 

Florida has become the most expensive state in the nation for car insurance, with drivers paying an average of $3,183 annually for full-coverage policies - a 15% increase from the previous year. The state's elevated insurance rates are partly attributed to significant losses incurred during last year's Hurricane Ian, which struck Southwest Florida. This rise in rates for Florida residents raises questions about whether drivers in states unaffected by extreme weather are indirectly sharing the financial burden through rate hikes. 

While extreme weather is a factor in rising insurance rates, it is not the sole driver. Factors such as inflation, new regulations, supply chain costs, increasing car prices and other also play a role.  

New York Drivers Experience Rising Car Insurance Costs: What's Behind It 

In addition to nationwide increases in auto insurance premiums, if you're a resident of New York State, it's crucial to scrutinize your policy as you might have recently noticed a spike in your premiums. 

What's causing this? The answer lies in a new state law that took effect on August 1, which mandates auto insurers to include an additional coverage type – supplemental spousal liability insurance. This applies to all drivers, irrespective of their marital status or whether they're purchasing coverage for business purposes.

The law came into effect on August 1 for new policies, renewals, and policy modifications. A spokesperson for State Senator Neil Breslin, a Democrat and the bill's most recent sponsor, mentioned that the Legislature is exploring potential amendments to the law during the upcoming legislative session. The law is set to expire on July 31, 2027. 

The catch is that policyholders are automatically enrolled in this coverage, unless they explicitly opt-out in writing – a step that single individuals should consider taking immediately. Additionally, for many businesses, opting out might also be a wise choice. 

But this raises an important question: in an era where auto insurance costs are already on the rise, what benefits do married individuals stand to gain from this change? 

Currently, all drivers and their passengers in New York already have access to "no-fault" coverage. This coverage offers up to $50,000 for medical expenses and wage loss, regardless of fault in an accident, as confirmed by insurance experts. 

So, what's the purpose of the supplemental spousal liability coverage? In cases where a driver is responsible for an accident resulting in serious injuries to their spouse, leading to expenses exceeding the limits set by "no-fault" coverage, including pain and suffering, this additional coverage permits the injured spouse to pursue a larger compensation. However, they would need to initiate a lawsuit to establish the culpability of the at-fault spouse. 

Paul Tetrault, Senior Director of Personal Lines and Counsel for the American Property Casualty Insurance Association, a trade organization for insurers, explains, "The spousal supplemental coverage allows a spouse to sue the other spouse to access this liability coverage, in addition to no-fault benefits." 

While the idea of suing one's own spouse may seem unusual, insurance experts note that such situations are rare. Nonetheless, advocates for this change, including personal injury lawyers, argue that policyholders are often caught off guard when they discover their spouses aren't covered. 

Before the new law came into effect, policyholders had the option to request or opt into this coverage. 

The cost of this supplemental spousal liability coverage varies depending on several factors but typically amounts to around 5 percent of the bodily injury premium, according to the New York State Department of Financial Services, translating to roughly $20 to $84 annually. (Interestingly, some policyholders have reported premium increases of over $100.) 

New York's requirement for this coverage makes it an outlier, as most states do not have a statute mandating it, according to the American Property Casualty Insurance Association. However, it's important to remember that in other states, it might still be possible to sue a spouse and recover damages, although the mechanisms vary. 

In the event that consumers encounter difficulties opting out of the coverage even after contacting their insurer, they have the option to file a complaint with the Department of Financial Services.