CarInsurance.com Insights
- Several states are implementing auto insurance reforms in response to more than three straight years of hefty rate hikes.
- State legislatures are addressing these hikes with laws that require increased transparency from insurers regarding their rate-setting practices.
- Consumers may see rate relief in some areas where reforms are taking effect.
After three years of double-digit car insurance price hikes, some states are laying down the law. In places like Florida and Illinois, new regulations and state insurance reforms are preventing insurance companies from unfairly raising auto insurance rates.
The result is a reversal of skyrocketing rates – or at least a slowdown in their rise. Learn which states are leading the charge for car insurance rate regulation and changing what factors insurers can use in setting rates.
Rate increases vs. reform: What’s fueling the action?
According to the Insurance Information Institute, car insurance rates rose an average of 6% in 2022, 14.4% in 2023, and 12.8% in 2024. February 2024 saw the most significant jump, with insurance prices soaring 13% during the shortest month.
Inflation, increased accident frequency and more claims due to severe weather drove much of the increase during the last three years. Car insurance costs rose much faster than wages in many places, trapping consumers in a financial squeeze.
“We have data on actual insurance rates going back to around the year 2000, and we haven’t seen anything like the month of February 2024,” said Stephen Crewdson, managing director of Insurance Business Intelligence at J.D. Power.
While February saw a 13% rate jump, by the end of the year, rate inflation was around 1% or 2% — a normal increase.
“We’ve gone from record highs to normal in 10 months,” he said.
From July 2024 to July 2025, auto insurance rates rose at a more leisurely pace of 5.4%, per Consumer Price Index data from the Bureau of Labor Statistics. But on the heels of much bigger jumps, the cost was still too much for many to bear.
Unsurprisingly, consumers cried out against the steep increases, and lawmakers are listening. While 57% of car insurance consumers were shopping for new car insurance, according to the J.D. Power 2025 U.S. Insurance Shopping Study, several states were working to implement auto insurance reforms to bring rates back down to a manageable level.
Statewide reforms in 2025
At least a half-dozen states have enhanced consumer protections around auto insurance rates.
Florida
Tort Reform Act: HB 837 (2023) reduced insurers’ legal liabilities by changing legal fee structures and slashing the statute of limitations. It decreased insurance companies’ legal costs, creating room for lower rates.
The state’s Insurance Commissioner, Mike Yaworsky, announced an average 6.5% decline in auto insurance rates for 2025, crediting the state’s insurance and tort reforms.
Illinois
Illinois drivers have seen massive rate increases over the last several years, with more than $1.25 billion added to their collective car insurance bills in 2023 alone. Multiple reforms are underway to address these steep hikes.
No rate discrimination: The Motor Vehicle Insurance Fairness Act is a 2025 bill that prevents insurers from refusing to insure drivers based on factors other than their driving history. It also prohibits rates that are “excessive, inadequate, [or] unfairly discriminatory.” As of September 2025, the bill is still in committee.
Prior approval and rate caps: Senate Bill 268 would prohibit rate factors that weren’t driving-related and require prior approval for rate increases from the state insurance department. It could cap rate hikes at 15% unless the insurer could present justification for such an increase. The bill is still pending.
More limits on rate factors: House Bill 4611 would limit insurers to setting rates based on driving records, not age, sex, race, ZIP code or credit score. The state house adjourned without deciding the fate of HB 4611.
Michigan
No-fault reform: As of 2020, drivers can choose from three to four personal injury protection (PIP) coverage levels instead of the mandatory unlimited option required previously. According to the Insurance Information Institute, this results in more insured drivers because more drivers can find affordable coverage. Liability rates fell almost 25% from 2019 to 2023.
On deck: Two senate bills, SB 328 and SB 329, would cut rates 10% across the board and prevent insurers from charging higher rates after coverage lapses.
New Jersey
Prohibited rating factors: Introduced in 2024, New Jersey’s Senate Bill 111 would prohibit insurers from using a person’s credit score, education level, or occupation as factors when setting their insurance rate. As of September 2025, the bill remains in committee.
Rate transparency: Another bill, Senate Bill 4149, would require insurers to request approval for their underwriting methods and provide clear and transparent explanations regarding the rates they set.
Insurer takeaways: Price optimization bans and transparent rate filings
As state legislatures introduce and pass more reforms, insurers must follow stricter transparency rules around rate filings.
For example, bans on “price walking,” or price optimization, would end pricing practices that charge higher auto insurance rates to longtime customers, effectively punishing them for loyalty. Maine, Pennsylvania, Rhode Island and Vermont have each banned this tactic as discriminating against customers for their shopping habits.
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Consumer takeaways: Rate relief and more coverage options
Where reforms exist, consumers may see rate relief or more coverage options, especially as additional insurers enter a particular market. Shopping for auto insurance is easier – and more critical – than ever.
“There are so many online tools available, and you have even traditional channels like an independent agent,” Crewdson says. “Most people shop for insurance based on price, but something I like to remind consumers is, you’re buying insurance so that if you have a bad day – if you’re in a collision, or you come home and a tree fell on your house – that that bad day doesn’t become a worse day. You want the insurer to be there to help out and make that bad day better.”
In other words, look for an insurer that balances affordability, service and trust.
Frequently Asked Questions: State regulatory reforms
Which states are reforming car insurance in 2025?
Several states, including Florida, Illinois, Michigan, and New Jersey, have introduced reforms to stabilize or lower car insurance rates. These reforms focus on transparency, banning certain rating factors, and limiting how much insurers can raise rates.
How do auto insurance reforms affect my rates?
Reforms limit unfair pricing practices, requiring insurers to justify rate hikes and banning rating factors like credit score or occupation. While not every driver will see immediate savings, reforms are designed to slow or reverse sharp price increases.
Why did car insurance rates rise so much from 2022 to 2024?
Rates surged due to inflation, accidents, higher repair costs, and weather-related claims. According to the Insurance Information Institute, rates rose 6% in 2022, 14.4% in 2023, and 12.8% in 2024 — some of the steepest increases in decades.
Will car insurance reforms lower rates everywhere?
Not necessarily. The impact depends on your state’s laws. For example, Florida has already reported a 6.5% drop in rates in 2025 following insurance and tort reforms, while other states like Illinois are still debating bills.
What is ‘price walking’ in car insurance?
Price walking, or price optimization, is when insurers raise premiums on loyal customers simply because they don’t shop around. Several states — including Maine, Pennsylvania, Rhode Island and Vermont — have banned this practice.
What should I do if my state hasn’t passed reforms yet?
Even without reforms, you can shop around, ask about discounts and compare coverage levels. Online tools and independent agents can help you find competitive rates, regardless of your state’s regulations.
Do reforms change how insurers set car insurance rates?
Yes. Many reforms require insurers to base rates only on driving history and risk factors tied to the vehicle and driver behavior. In some states, insurers may no longer use factors like credit score, education level or ZIP code.
Resources & Methodology
Sources
- Executive Office of the Governor. “Governor Ron DeSantis Announces Rate Reductions for Miami-Dade County, Auto Insurance Reductions Statewide, and 11 New Companies Entering Florida’s Market.” Accessed September 2025.
- Florida Office of Insurance Regulation. “Florida Office of Insurance Regulation Announces Lower Auto Insurance Rates Thanks to Florida’s Insurance Reforms.” Accessed September 2025.
- New Jersey Department of Banking and Office of the Insurance Commissioner. “BULLETIN NO. 25-06: AUTO INSURANCE COVERAGE LIMITS PURSUANT TO P.L.2022, c.87.” Accessed September 2025.
- Legiscan. “State of New Jersey 221st legislation.” Accessed September 2025.
View more
- Jeff Irwin, State Senator. “Irwin Introduces Legislation to Cut Your Auto Insurance Bills.” Accessed September 2025.
- Insurance Information Institute. “Michigan Drivers Benefit From No-Fault Reforms; Rulings Constrain Gains.” Accessed September 2025.
- Illinois General Assembly. “Bill Status of HB1252.” Accessed September 2025.
- J.D. Power. “Despite Slowing Rate of Increase in Auto Insurance Pricing, Most Customers Still Shopping, J.D. Power Finds.” Accessed September 2025.
- Bureau of Labour Statistics. “CONSUMER PRICE INDEX – AUGUST 2025.” Accessed September 2025.
- Legiscan. “Illinois Senate Bill 268.” Accessed September 2025.
- Legiscan. “Illinois House Bill 4611.” Accessed September 2025.
- Legiscan. “New Jersey Senate Bill 111.” Accessed September 2025.
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