The Bad-Actor Cap and Interest Accrual Fix: Two Targeted Reforms with Distinct Practical Reach

Kenney Shelton Liptak Nowak LLP | Civil Litigation Update 

Karl E. Daniel, Esq.| Partner

Patrick S. Kenney, Esq. | Managing Partner

Wednesday, June 10, 2026

Two of the four major changes in New York's 2026 automobile tort reform package have received less attention than the 90/180 repeal and the modified comparative negligence bar. That is partly because they are narrower in scope. It is also, in the case of the interest accrual provision, because the underlying issue requires some familiarity with how prejudgment interest operates in bifurcated motor vehicle trials before its significance becomes clear.

Both provisions are now in effect for actions commenced on or after May 26, 2026, and neither is minor.

The $100,000 Non-Economic Damages Cap

Insurance Law § 5104(d) imposes a $100,000 ceiling on non-economic damages for certain categories of plaintiffs whose own unlawful conduct contributed to the accident. The cap is not a general damages limitation. It applies only within three defined circumstances.

Uninsured Drivers

The first covers a plaintiff who was operating an uninsured vehicle that the plaintiff was responsible for insuring, unless the lapse in coverage was for fewer than 30 days. The 30-day grace period is explicit in the statute and is significant. A plaintiff who allowed insurance to lapse for 29 days before the accident is not subject to the cap; one whose vehicle was uninsured for 31 days is. 

That distinction will generate fact-specific litigation over the duration and circumstances of insurance lapses, and defense teams should treat insurance status and coverage history as an early discovery priority in cases involving potential application of the cap.

Driving While Intoxicated

The second category covers a plaintiff who was operating while impaired by alcohol or drugs and was subsequently convicted of that impairment. Conviction is a condition of the cap's application; it is not a charge, not a plea to a lesser offense, and not a civil finding. A DWI charge that is reduced to DWAI, or that results in an ACD, does not trigger the cap. Defense practitioners relying on the cap in a given case need to confirm the outcome of any criminal proceeding before incorporating it into their damages analysis.

Felony Commission

The third category applies to a plaintiff operating during the commission of a felony, or in immediate flight from one, where the plaintiff was convicted of that felony. The same conviction requirement applies.

Importantly, the cap applies only to non-economic loss. Economic damages are not capped, including medical expenses beyond no-fault limits, lost wages, and other pecuniary items. It also does not apply at all in wrongful death cases. A fatality claim arising from the same accident is entirely outside the cap's reach, regardless of the decedent's conduct.

Conviction as a Threshold Condition

The conviction requirement is the provision's most significant practical limitation. Motor vehicle litigation rarely waits for criminal proceedings to conclude. A plaintiff arrested for DWI at the scene of a serious accident may face criminal charges that take a year or more to resolve, through trial, plea negotiation, or diversion, while the civil case proceeds in parallel.

Defense practitioners should track the status of any related criminal proceedings carefully and understand the implications of timing. If a civil case is resolved before a criminal conviction is entered, the cap is unavailable. If a conviction follows a civil resolution, it cannot be applied retroactively. The interplay between the civil docket and any parallel criminal matter is now a strategic consideration in cases where the cap may be relevant.

In cases where the criminal proceeding is still pending, defense counsel should consider whether to seek a stay of the civil matter pending resolution, which is a strategy that has been used in analogous contexts and that gains additional justification under the new law.

The Interest Accrual Codification

The second provision resolves a problem that had quietly generated inconsistent results across New York's appellate departments for years. The question was deceptively simple: in a motor vehicle personal injury case tried under the no-fault framework, when does prejudgment interest begin to run?

In most tort cases, the answer is the date of the liability determination. The Court of Appeals established that rule in Love v. State, 78 N.Y.2d 540 (1991). But Article 51 motor vehicle cases involve a three-step process of fault, then serious injury, then damages, and the serious injury threshold is an additional element a plaintiff must establish before recovering non-economic damages. 

If a jury finds negligence in a first phase but the plaintiff fails to establish serious injury in a second phase, there is no recovery at all. The question the Court of Appeals had not definitively resolved was whether interest accrues from the date of the negligence finding or only from the date the serious injury threshold is also satisfied.

The Appellate Division departments split on the answer. That split had practical consequences, because in cases litigated over several years, the difference between interest running from a negligence finding and interest running from a combined fault-plus-threshold finding could amount to a significant sum.

The 2026 reform codifies the latter rule: liability is not established for interest accrual purposes until there is a finding of both negligence and serious injury. That resolves the departmental conflict and benefits defendants and their insurers by deferring the start of the interest clock until the later of the two determinations.

Reading the Two Provisions Together

The bad-actor cap and the interest accrual fix address different problems, but both reflect the same underlying legislative goal: narrowing the conditions under which plaintiffs in motor vehicle cases can access or maximize non-economic recovery. The cap limits the ceiling on pain-and-suffering damages where the plaintiff's conduct crossed into illegality; the interest accrual provision limits the accumulation of prejudgment interest in the period between liability findings and threshold determinations.

Neither provision operates across the full range of motor vehicle litigation. The cap is triggered only by specific criminal conduct and requires a conviction. The interest accrual rule matters most in cases where the period between a negligence finding and a serious injury determination is extended, which happens in heavily litigated cases and in cases with significant threshold disputes.

Defense practitioners should incorporate both into their case management routines: tracking criminal case outcomes in matters involving DWI or felony conduct, and adjusting interest accrual calculations in cases with bifurcated or phased trial proceedings. The practical value of both provisions is real, but neither is self-executing.

Kenney Shelton Liptak Nowak LLP represents insurers, municipalities, and businesses in automobile liability and insurance defense matters throughout New York. For questions about how the 2026 tort reforms affect pending or future matters, contact our civil litigation team.