Car Insurance Requirements in New York State

Nobody enjoys having to pay their car insurance bills. However, in a state like New York, with its frequently congested roads and unpredictable weather, paying for insurance is a wise investment. It's also a legal requirement, with penalties for New York drivers who don't have the bare minimum of coverage.

Car Insurance Coverage Laws

To register your car in New York, you must have automobile liability insurance issued by the state of New York. Failure to do so may result in the suspension of your car's registration and your New York driver's license. The bare minimum of liability coverage you'll require is:

For a single accident, $10,000 in property damage
A person involved in an accident may be awarded $25,000 for bodily injury and $50,000 for death.
$50,000 for bodily injury and $100,000 for death in an accident involving two or more people.

Uninsured/underinsured motorist coverage limits are typically divided into two categories. The minimum limits for uninsured/underinsured motorist coverage in New York are 25/50, as explained below:

Per person, bodily injury coverage of $25,000 is provided. This is the most money paid out for a single person injured in your car by an uninsured driver.
Per accident, $50,000 in bodily injury coverage is provided. If more than one person is injured in your vehicle, this is the total amount paid out for all injuries caused by an uninsured driver.

Even if you are not driving the vehicle, this coverage must remain effective if your registration is valid. Motorcycles are an exception; you can cancel your insurance without fear of suspension if you store your bike for the winter. However, before legally riding your motorcycle on public roads, you must reactivate your insurance. For a New York-registered vehicle, you must have New York State coverage. In addition, your insurance must be issued in the name of the vehicle registrant and must remain in that name.

Car Insurance Minimum Requirements

Purchasing a car insurance policy is the simplest way to comply with New York's financial responsibility law. However, keep in mind that while getting the minimum coverage limits can help you save money on car insurance, you will be more exposed to the financial risks of an accident. Here's a look at what minimum coverage includes, as well as optional insurance:

Bodily injury (BI)

If you are at fault in a car accident, this coverage will pay for the other party's medical bills and car repair costs up to $25,000 per person or $50,000 per accident. According to insurance companies, most people in New York choose to increase their limits to 100/300, but this varies by insurer and depends on your needs. Consider whether your assets would be vulnerable to lawsuits in the event of an accident when deciding on your limits. To match their net worth, some drivers increase their coverage limits.

Property Damage (PD)

This coverage compensates you for any property damage you cause in an accident, up to $10,000 per accident. These two coverages, along with BI, are known as liability insurance, and they payout to the other party if you cause an accident. Higher PD limits are also available, but they vary by insurer.

Personal Injury Protection (PIP)

PIP, also known as no-fault insurance, pays your medical bills after a car accident, regardless of who is at fault, up to $50,000 per accident. Hospitalization, psychiatric care, physical therapy, rehabilitation, and long-term professional health services are all examples of medical expenses. If you cannot work due to your injuries, you are also entitled to 80 percent of your lost income for three years, with a $2,000 monthly cap. In addition, you will receive a daily stipend of $25 to cover necessary household expenses for up to a year after the accident. In addition, if you die in the accident, PIP coverage pays up to $2,000 in funeral expenses to your beneficiary. You can increase your PIP limits, but this is treated as separate optional coverage and is referred to as "additional PIP" or "medical payments."

Uninsured Motorist Bodily Injury (UMBI)

As the name implies, this type of coverage kicks in when an uninsured driver hits you. It covers your injuries up to $25,000 per person and $50,000 per accident for any accidents within New York. Keep an eye on the limits; if your coverage exceeds 25/50, it may be supplementary UMBI and cost more.

New York Optional Car Insurance Coverage

While New York law requires liability, UMBI, and PIP coverage, most carriers give customers the option to add or increase their coverage to provide additional protection. You can increase your protection by purchasing additional types of coverage, such as collision and comprehensive, and increasing the limits on the required portions of your policy. Here are a few to think about:

Supplementary UMBI

Higher coverage limits — typically up to 250/500, depending on the insurer — provide additional UMBI protection on top of the mandatory 25/50 minimum. It also covers out-of-state accidents involving an uninsured driver. Remember that your supplementary UMBI coverage limits may never exceed your BI limits.

MedPay

This coverage pays for medical and funeral expenses if you or your passengers do not have their own auto insurance policy. Because it is first-party coverage, MedPay will cover you and your passengers up to the limit you select, regardless of who is at fault. Limits vary by insurer and range from $500 to $2,000, but some drivers find this coverage redundant with their health insurance and other first-party coverage.

Additional Personal Injury Protection (APIP)

APIP is a supplement to your PIP coverage. This increase is typically purchased in $50,000 increments and can be used to cover additional expenses, lost wages, or medical expenses.

Optional Basic Economic Loss (OBEL)

This extension of your PIP coverage, similar to APIP, allows you to increase your coverage beyond the initial $50,000. OBEL coverage can be used to cover medical expenses and lost wages.

Comprehensive

Comprehensive coverage protects your vehicle against non-collision damage, though it does not cover collisions with animals.

Collision

Collision coverage protects your vehicle in a collision with another vehicle or a fixed object. However, keep in mind that collisions with animals are only covered under comprehensive coverage.

Gap Coverage

Because most vehicles depreciate quickly, it's a good idea to have some built-in protection to cover the difference between the actual cash value of your car and the amount you still owe on your loan. This is a great option for those who don't want to be caught upside down in a loan. It's also known as loan/lease coverage.

Rental Car Reimbursement

If your car is rendered inoperable due to a covered loss, this coverage can be used to pay for a rental car until yours can be repaired. Limits and terms may differ depending on the company you select.

Roadside Assistance

If you have a breakdown on the highway, this coverage will pay for a tow, battery charge, or other related costs.

New York As A Diminished Value State

New York is a diminished value state, meaning drivers can recover diminished value from the at-fault party's insurance company. When your vehicle is involved in an accident, its resale value drops even if it is fully repaired to its pre-accident condition. The presence of a collision reduces the value of your vehicle in comparison to similar vehicles that have not been involved in an accident. A diminished value claim allows you to recoup any losses you incurred when selling your vehicle. Because New York is one of the 15 states that provides compensation for loss of value, you can file a claim by contacting the at-fault party's insurer. Certain requirements must be met to file a diminished value claim in New York:

If you were the party at fault in the accident, you are not entitled to compensation.
To process your claim, you will need to provide documentation. Check to see if you can provide photos, records of repairs, and proof of the value of your vehicle from a reputable source.
The statute of limitations for filing a diminished value claim in New York is three years.
Uninsured motorist coverage for diminished value claims is available in New York.

Sue Process in New York

Drivers in New York are limited to suing for quantifiable economic losses following a car accident, so they cannot sue for pain and suffering (referred to as non-economic loss). However, if you have a "serious injury" due to someone else's negligence, you may be able to get an exception to this limitation. The following are examples of "serious injury" under New York's no-fault law:

Significant injury, such as a fracture (complete or partial break of a bone) or injury that prevents you from performing your daily activities. A doctor will need to determine whether you will be able to recover in less than 90 days.
Significant facial disfigurement
Permanent injury, such as the inability to use a body organ or parts of your body indefinitely.
Significant/permanent disability includes permanent loss or limitation in using a body part, organ, function, or system.
The loss of a fetus
Death

Alternative Proof of Financial Responsibility

If you choose not to purchase auto insurance (or cannot do so), three other options are available to meet the state's financial responsibility requirements. Your proof of insurance will be a certificate or insurance ID card issued by the commissioner of the department of motor vehicles under these options. Here are some other options:

Security Deposit with the DMV

You have the option of depositing $150,000 as cash or security, which can be used to satisfy claims or judgments made against you as a result of an accident. If the commissioner believes the deposit is insufficient to meet the insurance requirement, they may request additional deposits.

Surety Bond

You can also file a surety bond with the DMV if a New York-licensed surety company issues it. The commissioner will issue a certificate if the bond meets state standards. You pay for any claims resulting from an accident with a surety bond, but if you can't, the surety company will pay in your place and collect from you later.

Self Insurance

You may be able to apply to become a self-insurer if you own and have more than 25 cars registered in your name. Aside from providing all documents required by the commissioner to prove your financial ability, you will be required to pay an annual fee for each car listed under your self-insurance. The commissioner will issue you a certificate if they believe you can payout for accident claims for each vehicle in the same way that a minimum liability policy would.

Final Thoughts

There are several types of coverage to consider, ranging from theft to weather damage. Insurance costs can add up, but keeping them in check isn't difficult. First and foremost, do not purchase any tickets! Insurance companies receive DMV reports, and if you're convicted of a moving violation, your rates will likely rise. Second, drive carefully. If you cause an accident and are at fault, your insurance rates may skyrocket. Drivers who voluntarily take a state-approved Defensive Driving course in New York State are eligible for a mandatory insurance discount. Completing this course entitles you to a 10% discount on your auto insurance. If you have points on your New York driving record, you may be able to reduce up to four of those points by taking the course; this may also keep your insurance rates from rising.