CarInsurance.com Insights
- States are adopting reforms to curb high insurance rates by requiring greater transparency and oversight of insurer pricing practices.
- New laws are limiting how insurers set and justify rate increases to protect drivers from unfair or unexplained premium hikes.
- Reforms focus on fairness and accountability by giving states tools to review and, in some cases, reject excessive rate filings.
After three years of hefty car insurance price hikes, some states are laying down the law. In states like Florida and Illinois, new regulations and state insurance reforms are preventing insurers from unfairly raising auto insurance rates.
Rate increases vs. reform: What’s fueling the action?
According to the U.S. Bureau of Labor Statistics’ Consumer Price Index data for February 2024, the cost of auto insurance rose approximately 20.6% year over year. 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. “We’ve gone from record highs to normal in 10 months.”
From July 2024 to July 2025, auto insurance rates rose at a slower pace of 5.3%, per Bureau of Labor Statistics Consumer Price Index data. 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 listened. 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 statutory reforms
Three states have changed the rules behind what drivers pay, and each took a different route.
Florida
House Bill 837 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 top five auto writer groups, covering 78% of the market, indicated an average -6.5% change for 2025 and -8.0% for 2026.
Illinois
Illinois now gives its insurance department authority to object to rates it deems excessive, inadequate or unfairly discriminatory. Before the signing, Illinois was one of only two states, with Wyoming, that did not exercise regulatory control over insurance rates.
Michigan
Drivers can choose from six personal injury protection (PIP) coverage levels — $50,000 for Medicaid enrollees, $250,000, $250,000 with exclusions, $500,000, unlimited and a Medicare opt-out — instead of the previously mandatory unlimited option.
New Jersey
New Jersey has debated limiting auto rating factors since 2020 without passing a law. The Senate approved one version in 2021 that died in the Assembly, and every bill introduced since has expired at the end of its session.
The current proposal, S-2248, would bar insurers from placing drivers in rating tiers based on education, occupation, employment status or credit information, and would stop them from collecting that information during underwriting. The Senate Commerce Committee discussed the bill in June 2026 but did not advance it to a vote.
If you live in New Jersey, nothing about how your rate is set has changed. Your insurer can still use your credit score, your job and your education.
Bans on price walking
As state legislatures introduce and pass more reforms, insurers must comply with stricter transparency rules for 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. Florida, 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 said. “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.”
Frequently Asked Questions: State reforms
How do auto insurance reforms affect my rates?
Reforms limit unfair pricing practices by requiring insurers to justify rate hikes and banning rating factors such as 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 in the past few years?
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.
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.
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
Florida Office of Insurance Regulation. “Florida Office of Insurance Regulation Announces Lower Auto Insurance Rates Thanks to Florida’s Insurance Reforms.” Accessed August 2026.
Insurance Information Institute. “Michigan Drivers Benefit From No-Fault Reforms; Rulings Constrain Gains.” Accessed August 2026.
Illinois General Assembly. “Bill Status of HB1252.” Accessed August 2026.
J.D. Power. “Despite Slowing Rate of Increase in Auto Insurance Pricing, Most Customers Still Shopping, J.D. Power Finds.” Accessed August 2026.
Legiscan. “Illinois Senate Bill 268.” Accessed August 2026.
Legiscan. “New Jersey Senate Bill 111.” Accessed August 2026.
Legiscan. “State of New Jersey 221st legislation.” Accessed August 2026.
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 August 2026.
U.S. Bureau of Labor Statistics. “CONSUMER PRICE INDEX.” Accessed August 2026.
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