New York No-Fault Lien: Insurer Rights and the Two-Year Rule

By the FigureMyTax Editorial Team · How we calculate

If you sue a non-covered person in New York, your no-fault insurer has a lien against any recovery to the extent of benefits paid or payable, you may not compromise the case without its written consent or court approval unless the settlement exceeds $50,000, and failing to sue within two years gives the insurer its own cause of action.

The lien

N.Y. Insurance Law 5104(b) says that in any action by a covered person against a non-covered person where damages for personal injuries arising out of the use or operation of a motor vehicle or motorcycle may be recovered, an insurer that paid or is liable for first party benefits has a lien against any recovery to the extent of benefits paid or payable.

Settling the case

No such action may be compromised by the covered person except with the written consent of the insurer, or with the approval of the court, or where the amount of the settlement exceeds $50,000.

The two-year rule

If the covered person does not commence the action within two years after accrual, the insurer gets a cause of action for the amount of first party benefits paid or payable against any person who may be liable for the personal injuries. The insurer's cause of action is in addition to yours, except that in any action you later bring, the amount of your basic economic loss is not recoverable.

Between covered persons

The lien applies against recoveries from non-covered persons, as section 5102 defines covered persons (we did not read that definition in full); against another covered person, basic economic loss cannot be recovered in tort at all.

A worked example

With $36,400 of benefits paid, a $100,000 recovery from a non-covered defendant carries a $36,400 insurer lien, leaving about $63,600 before attorney fees. See New York medical liens and New York attorney fees for other claims on a settlement.

Next steps

See what benefits are paid and use the New York no-fault calculator.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how New York's rules apply to your specific case with a licensed New York attorney.