3.1 New York Auto Insurance Requirements
Key Takeaways
New York's compulsory liability minimums are 25/50/10, plus a separate 50/100 floor for bodily-injury liability when an accident causes death.
New York is a no-fault state: every policy must carry $50,000 Personal Injury Protection (PIP) per person, called "basic economic loss."
PIP lost-wage benefits equal 80% of earnings, capped at $2,000 per month for up to three years; "other expenses" pay up to $25/day for one year.
Uninsured Motorist (UM) bodily-injury coverage is mandatory at 25/50; Supplementary UM/UIM (SUM) must be OFFERED up to liability limits but can be declined or reduced by signed waiver.
The serious-injury threshold of Insurance Law 5102(d) controls whether an injured person may sue for pain and suffering.
New York's Compulsory Auto Coverage
New York is a compulsory-insurance and no-fault state. No vehicle may be registered without coverage written by a New York-admitted insurer, and the Department of Financial Services (DFS) enforces the rules through electronic insurance reporting (the IIES system). A lapse of even one day triggers automatic registration suspension and per-day civil penalties.
Minimum Liability Limits
| Coverage | Required Limit |
|---|---|
| Bodily injury (BI) per person | $25,000 |
| Bodily injury per accident | $50,000 |
| BI per person — accident causing death | $50,000 |
| BI per accident — accident causing death | $100,000 |
| Property damage (PD) per accident | $10,000 |
The death-uplift (50/100) is a frequent exam trap: ordinary BI is 25/50, but when the accident causes death, the floor rises to 50/100. Producers should memorize both rows.
Proof and Penalties
- Owners must keep an FS-20 insurance ID card (paper or electronic) in the vehicle.
- Driving without coverage: fine up to $1,500, a $750 civil penalty to restore the license, and possible 1-year revocation.
- A lapse also produces a per-day civil penalty (e.g., $8/day rising to $12/day) before suspension.
Worked Example
Driver A rear-ends Driver B, who suffers a fatal injury, and damages two parked cars. Because the accident caused death, A's BI must respond up to $50,000 for the one fatality and $100,000 aggregate; PD of $10,000 splits across the parked cars. If A carried only 25/50/10, A is personally liable for the shortfall.
No-Fault (PIP) — "Basic Economic Loss"
Every New York auto policy includes Personal Injury Protection (PIP), statutorily called basic economic loss, totaling $50,000 per person. PIP pays the named insured, household members, passengers, and pedestrians regardless of fault, but it covers bodily injury only — never property damage.
What the $50,000 Pays
| Benefit | What It Covers | Limit/Rule |
|---|---|---|
| Medical/health expense | Hospital, surgery, MRI, PT, prescriptions | Reasonable & necessary |
| Lost earnings | Wage replacement | 80% of wages, max $2,000/month, up to 3 years |
| Other necessary expenses | Household help, transport to treatment | $25/day, up to 1 year |
| Death benefit | Paid to estate | $2,000 (on top of the $50,000) |
Claimants must give the insurer written notice within 30 days of the accident and submit medical bills within 45 days. Miss these deadlines and benefits can be denied — a tested administrative detail.
Optional No-Fault Add-Ons
- APIP (Additional PIP) — raises the $50,000 limit for medical and wage loss.
- OBEL (Optional Basic Economic Loss) — an extra $25,000 for medical or wage loss once basic PIP exhausts.
Memory aid: PIP is the "my own insurer pays me first" coverage. It does NOT pay for car repairs — that is collision/property damage. Mixing the two is the single most common no-fault error.
Serious-Injury Threshold and SUM
The Serious-Injury Threshold (Insurance Law 5102(d))
Because PIP pays everyone, New York limits lawsuits for pain and suffering. A claimant may sue in tort only if the injury crosses the serious-injury threshold:
- Death; dismemberment; significant disfigurement
- Fracture; loss of a fetus
- Permanent loss of use of a body organ, member, function, or system
- Permanent consequential limitation, or significant limitation, of a body function/system
- A medically determined injury preventing customary daily activities for at least 90 of the 180 days following the accident (the "90/180" rule)
If the injury does not meet the threshold, recovery is limited to no-fault benefits — no pain-and-suffering award.
Uninsured Motorist (UM) vs. SUM
| Feature | UM (mandatory) | SUM (must be offered) |
|---|---|---|
| Required? | Yes — built into every policy | Insurer must offer; insured may decline/reduce by signed waiver |
| Minimum limit | 25/50 (equals BI floor) | Up to the policy's BI liability limit |
| Covers | BI from uninsured/hit-and-run | BI gap when at-fault driver is underinsured |
| Property damage? | No (PD-UM not required in NY) | No |
Correct a common myth: SUM is not mandatory at a fixed limit. Under Insurance Law 3420(f)(2), the insurer must offer SUM equal to the policy's BI limits, and the first-named insured may decline or buy lower SUM with a written, signed election.
MVAIC
The Motor Vehicle Accident Indemnification Corporation (MVAIC) is the payer of last resort for victims of hit-and-run, uninsured, or stolen vehicles when no other coverage exists. It is funded by assessments on insurers and applies the compulsory limits. A claimant must give MVAIC notice of intention to file within 90 days and, for hit-and-run claims, report the accident to police within 24 hours.
Exam Logistics Anchor
The New York property and casualty licensing examination is delivered by PSI Services LLC for DFS: it contains 150 multiple-choice questions and requires a 70% overall passing score, with a time allowance of 2.5 hours (150 minutes). Producers must complete 90 hours of prelicensing education before sitting. Auto no-fault, the serious-injury threshold, and the SUM offer/waiver rule are recurring high-frequency casualty topics on this exam, so commit the exact thresholds above to memory rather than approximating them.
Common trap: Candidates conflate the $25/day "other expenses" benefit with a daily medical or wage benefit. It is a separate, capped allowance for incidental costs like transportation and household help — not a substitute for the 80%/$2,000-month wage benefit.
An at-fault driver causes an accident that results in one death. What are New York's minimum bodily-injury liability limits the at-fault driver's policy must satisfy?
$25,000 per person / $50,000 per accident
$50,000 per person / $100,000 per accident
$10,000 per person / $20,000 per accident
$100,000 per person / $300,000 per accident
Under New York no-fault, how are lost-wage benefits paid within the $50,000 basic economic loss?
100% of wages with no monthly cap
80% of wages, capped at $2,000 per month for up to three years
A flat $25 per day for up to one year
Two-thirds of the average weekly wage
Which statement about Supplementary Uninsured/Underinsured Motorist (SUM) coverage in New York is correct?
SUM is mandatory at a fixed 25/50 limit on every policy
SUM covers property damage caused by uninsured drivers
Insurers must offer SUM up to the policy's BI limits, but the insured may decline or reduce it with a signed waiver
SUM replaces PIP benefits after they exhaust
Sections you finish are checked off in the contents.