Illinois Wants to Change How Car Insurance Rates Are Set: What It Means for You

What the Bill Does

Senate Bill 1486, which passed the Illinois House in March, would give the Illinois Department of Insurance new authority to review and challenge rates. It would also require insurance providers to give at least 60 days' notice before any rate hike above 10%, and it would require that prices be based on driving record rather than age, credit score, or ZIP code.

Starting July 1, 2027, the Department of Insurance would have the authority to review new rate filings. Companies could still begin collecting premiums under new rates immediately, but the department could flag rates it finds excessive, inadequate, or unfairly discriminatory, notify the company, and trigger an administrative hearing. If the agency still finds the rates excessive after that hearing, it could reject the filing outright. 

And in a provision that has received less attention than it deserves: if a rate is ultimately rejected, insurers must return overpaid premiums to customers.

Why This Legislation Exists

Illinois and Wyoming are currently the only two states in the country without any rate review process. That gap has had measurable consequences. A study commissioned by the Illinois Secretary of State's office found that drivers with poor credit can pay more than 2.7 times what those with excellent credit pay, that drivers in certain ZIP codes can face rates more than 2.5 times higher than those in other parts of the state, and that drivers between the ages of 80 and 84 pay up to 72% more for bodily injury coverage than drivers in their mid-50s, even with clean records.

Illinois auto insurance rates increased 18% in 2024. The bill is being championed by Secretary of State Alexi Giannoulias, who launched a statewide "Driving Change" campaign and public survey to document how pricing practices affect Illinois families. Giannoulias has argued that insurers are "basing car insurance premiums on factors that are impacting those who can least afford it," including seniors, working families, and communities of color, and that a driver in an affluent neighborhood with a DUI on their record can pay less than a driver in a lower-income area with a clean record.

What the Insurance Industry Says

The bill has drawn strong opposition from insurers. The Illinois Insurance Association, the American Property Casualty Insurance Association, and the National Association of Mutual Insurance Companies called SB 1486 "one of the most sweeping and harmful insurance regulatory overhauls in state history" and warned it would make insurance more expensive, not less, for Illinois consumers.

The companies noted that auto insurance rates in Illinois are currently 18% below the national average and are declining due to fewer crashes and claims. Their concern is that a slow or politically influenced rate approval process would create uncertainty that ultimately drives up costs or reduces the number of insurers willing to operate in Illinois.

Consumer advocates disagree. Abe Scarr, director of the Illinois PIRG consumer advocacy group, dismissed the insurance industry's warnings as scaremongering, and his organization has pushed to go further by banning the use of race and credit entirely in setting premiums.

What This Means for Accident Victims

For drivers involved in accidents and dealing with insurance claims, SB 1486 has several practical implications worth understanding.

The 60-day notice requirement matters most at renewal time. If your insurer intends to raise your premium by more than 10%, whether because of an accident on your record, a change in your ZIP code, or any other reason, they would be required to give you advance notice. That window gives you time to shop for alternative coverage before the increase takes effect, rather than absorbing it at renewal without warning.

The rebate provision is also meaningful. Under the bill, if the Department of Insurance reviews a rate and finds it was excessive, you could be entitled to a refund on overpaid premiums. That is a new form of consumer recourse that does not currently exist in Illinois.

What the bill does not directly change is how fault is determined in accidents or how claims are settled. Illinois operates as an at-fault state, meaning the driver responsible for a crash remains liable for damages, and that framework is untouched by this legislation. However, fairer, more transparent pricing would make it more likely that all drivers on Illinois roads carry adequate coverage, benefiting everyone involved in an accident.

Where the Bill Stands

SB 1486 has passed the Illinois House and is now in the Senate awaiting a concurrence vote, with no scheduled date yet. The Senate passed its own version of insurance reform in October 2025, but the House version is broader, covering both auto and homeowners insurance and including new data requirements. Whether every Senate Democrat who supported the earlier bill will back this combined version is an open question. If it clears the Senate, it goes to Governor Pritzker's desk.

For Illinois drivers, the outcome of that vote will matter. The current system allows factors largely outside a driver's control to determine what they pay. This bill would change that, though whether it delivers lower premiums or creates new complications will depend on how the law is implemented and how insurers respond.

If you have been in an accident and have questions about how your insurance coverage affects your claim, the independent attorneys we work with can help you understand your rights and options.

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