New York Drivers Are Paying More for Car Insurance. Here’s Why.

Most of us don’t spend time studying the fine print in our auto insurance policies, but if you live in New York State, take a close look: Your premium may have risen — or will soon — because you were automatically enrolled in new coverage you may not even need.

A state law that went into effect on Aug. 1 requires auto insurers to add a new line of coverage — supplemental spousal liability insurance — for all drivers, even those who are unmarried or are buying coverage for a business.

Policyholders can opt out of the coverage, as long as they do so in writing — something singles should do immediately. Opting out may also make sense for many businesses.

But a question remains: With the cost of auto insurance already on the rise, what do married people stand to gain?

All drivers and passengers, including spouses, already have access to “no-fault” coverage in New York, which pays up to $50,000 for medical care and wage loss, regardless of who was at fault in an accident, insurance experts said.

But if a driver caused an accident and the driver’s spouse was seriously injured — and had expenses above those limits, including pain and suffering — the supplemental spousal liability coverage would allow the injured spouse to seek a bigger payout. He or she would need to file a lawsuit to prove that the driving spouse was culpable.

“The spousal supplemental coverage allows a spouse to sue the other spouse to access this liability coverage, in addition to no-fault benefits,” said Paul Tetrault, senior director, personal lines and counsel, for the American Property Casualty Insurance Association, a trade organization for insurers.

The idea of suing your own spouse is unusual, and insurance experts said they hadn’t heard of this situation’s arising often. But proponents of the change, who include personal injury lawyers, say policyholders are often surprised to learn their spouses aren’t covered.

Before the new law took effect, policyholders could request, or opt into, the coverage.

The cost varies, depending on several factors, but will generally run about 5 percent of the bodily injury premium, according to the New York State Department of Financial Affairs, or roughly $20 to $84 annually. (This reporter noticed that her premium automatically rose more than $100.) It generally covers up to the policy’s existing bodily injury liability limits.

“The passengers can always bring a lawsuit against the driver — if they cause an accident that causes them injury,” said Mike Jaffe, a partner and personal injury lawyer with Pazer, Epstein, Jaffe & Fein. “But in the case of married couples, coverage often doesn’t exist.”

“It is a bizarre quirk,” added Mr. Jaffe, who is also a former president of the New York Trial Association, a trade group that has lobbied for the law. “This law aims to correct that. It is a low-cost coverage for something that is somewhat rare.”

The New York Trial Association, which spent $1.3 million on lobbying efforts in New York state government last year, has supported the law change for at least a decade.

The insurance industry, however, did not support the law. Ellen Melchionni, president of the New York Insurance Association, a trade group, said the industry believed that “opt-out mechanisms are not consumer friendly and are bound to lead to greater confusion.”

New York is an outlier — most states do not have a statute mandating this coverage, according to the American Property Casualty Insurance Association. But it may be possible to sue one’s spouse and recover damages in other states, a spokesman said.

“The mandate to provide coverage to all policyholders unless they decline the coverage in writing is not common in other states,” he said. “This reinforces the importance of consumers talking with their insurance companies or agents to make sure their policy coverages fit their needs.”

The change took effect on Aug. 1 for new policies, renewals and any sort of modifications to existing policies. The New York Department of Financial Services has a declination form on its website, but your insurer should send you a form that allows you to decline the coverage.

A spokesman for State Senator Neil Breslin, a Democrat and the bill’s most recent sponsor, said the Legislature was examining whether it should narrow the law in the coming legislative session. It sunsets on July 31, 2027.

“We certainly don’t want people to pay for coverage that would provide them zero benefit under any circumstances,” the spokesman added.

If consumers are unable to opt out of the coverage even after contacting their insurer, they can file a complaint with the Department of Financial Services.

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