Are You Paying Too Much for Car Insurance? How These States Are Taking the Wheel on High Rates

Car insurance rates keep going up. This is mostly because of inflation, higher costs to fix cars, and more money lost by insurance companies from claims. While each state controls how much insurers can charge, state insurance departments also have to make sure insurance companies want to keep doing business there. States have responded to rising rates in different ways, from making it harder to sue insurers for denied claims to giving drivers more coverage choices and discounts. 

Key Takeaways

• Some states have taken measures to fight the increase in car insurance rates, but their approaches vary widely.
• In Illinois and New Jersey, new laws have been proposed to stop insurers from using personal details unrelated to driving, such as credit scores or job titles, when setting rates. 
• Florida made it harder for people to sue their insurer if a claim is denied. This change led to lower rates on average, but may also limit drivers’ ability to challenge unfair denials.

Why Car Insurance Rates Are Climbing

Between May 2024 and May 2025, average car insurance rates increased by 7% nationwide. That increase adds up to hundreds of extra dollars each year for many drivers.

There’s no one reason for these elevated costs, but several factors have been pressuring rates upward:

Rising Repair Costs 

Motor vehicle repair costs have increased nearly 13% over the past two years. Ironically, high-tech vehicles may be one cause: Cars with advanced driver assistance programs, such as emergency braking, blind spot monitoring, and lane departure warning, can cost significantly more to repair.

Inflation 

General inflation has led to higher costs for goods and services across the board, including car parts, labor, and medical care. These higher costs make it more expensive for insurers to pay claims, which can lead to higher premiums for drivers.

Bigger Insurance Losses 

In recent years, the number of natural disasters causing at least a billion dollars in damage has increased substantially. Insurers have had to pick up the tab, exposing them to financial loss and forcing them to raise premiums as a result.

State Leaders Step In: What Governors Are Doing

Rules for car insurance and other forms of property and casualty insurance are set at the state level. Each state has a department of insurance, led by a commissioner, that enforces those rules. Lawmakers and regulators have two key jobs: to ensure drivers can get the coverage they need at a fair price and to ensure insurance companies can still do business in the state.

California

Balancing consumer protection and business needs can lead to unexpected consequences. California is a clear example. After wildfires devastated the Los Angeles area in early 2025, causing as much as $53.8 billion in damage, a law signed by Gov. Gavin Newsom blocked insurers from canceling home insurance policies in emergency zones for one year. To extend this protection, Insurance Commissioner Ricardo Lara called on all property insurance companies in the state to pause nonrenewals and cancellations. 

At the same time, California has put measures into place to incentivize insurers to continue writing home insurance policies in the state, as many have pulled back from offering home insurance coverage in areas prone to wildfire. These initiatives allow insurers to increase their rates to account for catastrophic risk models—predictions of future natural disasters—and reinsurance costs, which have been growing as insurers face greater and greater financial shortfalls. 

California and other states also have laws to regulate car insurance companies. Proposition 103, which became law in 1988, gives the Department of Insurance wide latitude to manage rate increases. A 2018 press release celebrating the law’s 30th anniversary said it had saved drivers more than $154 billion in auto insurance premiums. 

New Jersey

In 2025, New Jersey lawmakers introduced a bill to change how car insurance rates are set. It would ban insurers from using education, occupation, or credit history in underwriting. It would also require companies to offer lower rates to drivers with safe driving records. 

In addition, the bill requires insurers to create a comparison-shopping tool on their websites to allow customers to find the best and most affordable policy for their needs.

Michigan

In 2019, Gov. Gretchen Whitmer signed legislation to reform no-fault car insurance. Under the new law, drivers have more discretion in how much personal injury protection (PIP) coverage they carry. The law further mandated insurers to reduce premiums for each of the four levels of PIP coverage available in Michigan:

• At least 45% premium reduction for the $50,000 level of PIP coverage
• At least 35% premium reduction for the $250,000 level of PIP coverage
• At least 20% premium reduction for the $500,000 level of PIP coverage
• At least 10% premium reduction for unlimited PIP coverage

Gov. Whitmer’s administration credits the law with a nation-leading drop in the percentage of uninsured drivers.

Florida

While Michigan and New Jersey have fought rate increases by increasing pressure on insurers, Florida has taken a different approach. In 2023, Gov. Ron DeSantis signed a set of insurance reforms into law, including a key change: ending “one-way attorney fees.” 

Before the new law, if you sued your insurer and won, the insurer would have to cover your legal fees. Now, you must either pay your attorney yourself or find one who’ll work for a cut of your payout if you win. Since car insurance disputes are usually small and slow to resolve, lawsuits often aren’t worth the cost for drivers or their lawyers.

The result was a large decrease in car insurance premiums, with DeSantis announcing rate reductions of between 6% and 10.5%. DeSantis noted that litigation against insurers had seen a “dramatic decline.”

Illinois

Illinois could also soon pass a new law aimed at lowering car insurance rates. A bill introduced in the General Assembly would add price protections and require more transparency. Like New Jersey’s proposal, it would ban insurers from using education, occupation, credit score, and other non-driving details to set rates.

In addition, any car insurance company that wants to increase rates by more than 10% in a 12-month period must submit to a public disclosure and comment period; rate increases of more than 15% are prohibited “without exceptional justification.”

What You Can Do to Lower Car Insurance Costs

While you wait for your state to start enacting car insurance reform, there are steps you can take to lower your car insurance now.

Shop Around

Use online comparison tools to compare policies and rates quickly. 

“Providers have different ‘sweet spots’ for which drivers and which vehicles they prefer to insure,” said Zach Patten, founder of Oak Grove Insurance. “If you’ve recently changed vehicles, added or removed drivers, or if your driving record has recently changed, it may be especially beneficial to review options.”

Look for Discounts

Many insurers offer savings for things like safe driving, bundling car and home insurance, or driving fewer miles.

“There may also be discounts for auto club members, senior drivers, and a paid-in-full bill plan,” Patten said.

Opt for a Higher Deductible

A higher deductible means you’ll pay more out of pocket if you file a claim. But your monthly premiums will likely be lower. Deductibles usually start around $500 but can range as high as $2,000. Pick an amount that fits your budget and comfort with risk.

The Bottom Line

States have broad power to regulate insurance, which gives them some control over car insurance costs. As premiums keep rising, lawmakers who don’t act may face pressure from frustrated drivers. Governors in Michigan and Florida have taken very different routes to address the issue, while leaders in New Jersey and Illinois have taken legislative action.