The largest insurer of taxis and Ubers in New York City is on the verge of a financial collapse that could force thousands of cars out of service and lead to higher costs for drivers and passengers.

The insurer, American Transit Insurance Company, provides coverage for about 74,000 for-hire vehicles in the city, or more than 60 percent of the available cars, according to city records.

In its latest financial filing, the privately owned company reported that it was insolvent, with more than $700 million in losses from existing and projected claims from past accidents — a huge hole that has been growing for years in part because of questionable financial practices, according to state officials.

That means American Transit does not have enough money in reserve to pay out those claims despite years of collecting premiums on those policies. Instead, the company has managed to continue operating by using money coming in from new premiums to help cover those costs, essentially leaving its current clients underinsured in the event of an accident, state officials said.

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While American Transit still has options, it has faced a deepening crisis as its losses have mounted. Were the company to collapse altogether, thousands of taxis, Ubers, Lyfts and livery cars would be immediately taken off the road until they could find other insurance, which is likely to be difficult and costly since most large insurers do not offer this specialized insurance in the city.

Drivers of these vehicles would lose their income, while riders would have to find another way to get around. Hundreds of millions of dollars in accident claims and medical bills could also go unpaid.

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