Guides

How car insurance rate approval works

How states review car insurance rates: prior approval, file-and-use, use-and-file and flex rating, what regulators check, and how to follow a filing yourself.

4AutoInsurance · Published October 4, 2026

Car insurers cannot simply pick a price: they file their rates and rating rules with each state's insurance department, which checks that the rates are not excessive, inadequate or unfairly discriminatory. What differs from state to state is timing. In prior approval states the regulator must approve a rate before it is used; in file-and-use and use-and-file states the insurer can charge the new rate when or shortly after it files, and the regulator can step in afterward.

Almost every state's rating law uses the same three tests. California's version is typical: "No rate shall be approved or remain in effect which is excessive, inadequate, unfairly discriminatory" (Cal. Ins. Code 1861.05).

  • Excessive: higher than the expected claims, expenses and a reasonable profit justify.
  • Inadequate: too low to keep the insurer solvent, or priced below cost to drive out competitors.
  • Unfairly discriminatory: charging different prices to drivers with similar expected costs, or using a factor the state bans. States set their own lists of banned rating factors; Michigan, for example, bars rating on sex, marital status, home ownership, education, occupation, ZIP code and credit score.

The insurer carries the burden of showing its rate meets the standard, using the actuarial support described in loss ratios and rate filings: how insurers justify an increase.

The main systems

System When the new rate can be used What the regulator can do
Prior approval Only after approval, or after a "deemed approved" waiting period passes Approve, approve a smaller change, or disapprove before drivers pay it
File-and-use When filed, or after a short waiting period Review and disapprove after use; may order refunds in some states
Use-and-file Immediately, with the filing due within a set time afterward Same as file-and-use
Flex rating Changes inside a set band use file-and-use; larger ones need prior approval Full review only for changes outside the band
Information filing Rates filed for the record and to monitor competition Act if the market is not competitive or a rate breaks the law

States can apply different systems to different lines of insurance, and they change their rules. Your state insurance department can tell you which applies to private passenger auto.

Recent changes

Several states have moved toward more review since 2025:

  • New York: the 2026-27 budget ended flex rating for increases. Insurers had been able to take up to two overall increases without prior approval as long as their combined effect stayed within 5%. The Department of Financial Services proposed a regulation on September 9, 2026 requiring express prior approval of any increase, and the budget also requires insurers to explain increases over 10%.
  • Illinois: in August 2026 the governor signed HB 4273 and SB 714, letting the Department of Insurance object to auto and home rates it finds excessive, inadequate or unfairly discriminatory, according to Carrier Management.
  • Louisiana: Act 11 of 2025 repealed the distinction between "competitive" and "noncompetitive" markets that had limited the commissioner's power to disapprove rates.
  • Michigan: the 2019 reform put auto rates under prior approval by the Department of Insurance and Financial Services; see michigan's no-fault reform explained.

California: the most formal process

California's Proposition 103 created the country's most detailed prior-approval process. Under Insurance Code 1861.05, every insurer that wants to change a rate files a complete application with the commissioner, and the public is notified. An application is deemed approved 60 days after public notice unless:

  • a consumer or the commissioner calls for a hearing, or
  • the requested change exceeds 7% for personal lines (15% for commercial lines), in which case a requested hearing must be held.

Absent disapproval or extraordinary circumstances, an application is deemed approved 180 days after it is received. Members of the public can intervene in rate proceedings and seek compensation for doing so. The California Department of Insurance says its review saved drivers $6.6 billion in premiums from 2019 to 2025 (CDI, April 2026). More on the measure is in California Proposition 103 explained.

The trade-offs

Supporters of prior approval argue that review keeps increases honest, gives the public a voice and catches errors before drivers pay for them. Insurers argue that slow approvals keep rates below cost after claim costs jump, which leads companies to limit new business or leave a state. The Insurance Research Council found that from 2010 to 2023 the average number of days to approve a personal auto filing grew about 40%, and the share of filings approved for less than requested grew about 10 percentage points. Under file-and-use, prices adjust faster in both directions, but drivers rely more on competition and after-the-fact review.

What a filing does and does not tell you

A filing's headline number is an average across all of the insurer's policyholders in the state. Your own change can be higher or lower because:

  • The filing changes individual rating factors, such as territory, vehicle or driver age factors, by different amounts.
  • Your own situation changed: a new ticket or claim, a teen driver, a new car, or a discount that ended.

A hypothetical example: an insurer files a 9% average increase. Its territory factors for one city rise 15% while rural territories rise 3%, and the factor for newer vehicles rises more than for older ones. A city driver with a two-year-old car could see 18% while a rural driver with an older car sees 2%, and both are consistent with a 9% average.

How to follow a rate filing yourself

  1. Find the filing. Many states let you search filings through the NAIC's SERFF Filing Access system, linked from the insurance department's website. Others post approved rate changes or have their own databases.
  2. Note the overall change and the range. Filings usually state the average change by coverage, the number of policyholders affected and the minimum and maximum changes.
  3. Compare with your renewal. If your change is far above the filing's range, ask the insurer which factors changed. The renewal rate increase checker lists the usual reasons, and why your premium went up at renewal with no claims explains them.
  4. Comment or complain. In prior-approval states with public notice, such as California, you can submit comments or request a hearing within the deadline. Anywhere, you can ask your department whether a rate was applied correctly to you.
  5. Shop. A filing approved for one insurer says nothing about another's prices; comparing quotes is still the fastest way to react.

Key takeaways

  • Every state requires that car insurance rates be neither excessive nor inadequate nor unfairly discriminatory.
  • Prior-approval states review rates before use; file-and-use and use-and-file states let insurers charge first, with review afterward.
  • New York, Illinois and Louisiana expanded regulators' rate powers in 2025 and 2026; Michigan moved to prior approval with its 2019 reform.
  • California's Prop 103 process includes public notice, hearings for personal-lines increases over 7% on request, and paid consumer intervenors.
  • A filing's average change can differ sharply from your own, because filings also change individual rating factors.

Terms used in this guide

Rate filing The package of proposed rates, rating rules and supporting data an insurer submits to a state regulator when it wants to change prices. Prior approval A rate regulation system in which insurers must get the state regulator's approval before using new rates or rating rules. File-and-use A rate-regulation system in which insurers can start charging new rates once they are filed with the state, without waiting for advance approval. Loss ratio The share of premium an insurer pays out in claims, often including claim-handling costs; a key number in rate filings and profit reports. Rating factors The characteristics insurers use to price a policy, such as driving record, location, vehicle, mileage and, where allowed, age and credit. Insurance commissioner The official who runs a state's insurance department and enforces its insurance laws; elected in some states, appointed in most.

Related states

California California's minimum rose to 30/60/15 on January 1, 2025 and is set to reach 50/100/25 in 2035. It is an at-fault state with pure comparative negligence. New York New York is a no-fault state requiring 25/50/10 liability (50/100 for death), $50,000 of PIP and 25/50 uninsured motorist coverage. Michigan Michigan is no-fault. Since the 2019 reform you choose a PIP medical level, liability defaults to 250/500 (floor 50/100) and $1 million PPI is required. Illinois Illinois requires 25/50/20 liability plus 25/50 uninsured motorist coverage, uses a 51% fault bar and suspends uninsured drivers' licenses for 3 months. Louisiana Louisiana requires 15/30/25 liability. 2025 laws added a 51% fault bar from 2026 and bar uninsured drivers from the first $100,000 of damages.

Related tools

Renewal rate increase checker See how much your car insurance renewal went up per year and per month, separate your own changes from a rate increase, and get a list of next steps.

Latest on this topic