Car insurance companies are regulated just as banking and securities industries are, and all are subject to scrutiny at state and federal levels. Although there is little regulation that comes from the federal level, each state has its own insurance commission that oversees the insurance companies that operate in that state.
These laws and regulations are put into place to protect the consumer from unscrupulous business practices.
States are involved in how insurance companies operate in their states and the legislature may be involved in setting minimum requirements for coverages and acceptable insurance rates for their motorists.
Some states, like Florida, require insurance companies to request rate increase and to justify their requests before they are allowed to increase rates. Increases may be granted if the proper justification is presented to the state legislature.
On the other hand, should the insurance company be found to be operating with the incorrect information or to be overcharging for their insurance rates, the state may need to step in to get the insurance company back into compliance.
When this happens, and it is rare, the insurance company may be subject to rigorous audits on a frequent schedule, fines and other inspections of their business practices. When something like this happens, it may not be deliberate and can be easily rectified by meeting with the insurance commission.
One such case just happened in Washington State and you can read more about that here. [Insert What Happens if a Company Overcharges here]
While one state may be auditing the insurance company in their state, other states may have no problem with the rates charged in their state, so the insurance company is only liable to the state in which the rates were a problem.
To find out if you qualify for cheap car insurance rates, it is very easy to request an insurance quote. This insurance quote may surprise you by offering you a cheap car insurance premium.