On August 4, Governor JB Pritzker signed Senate Bill 714 into law, giving the Illinois Department of Insurance authority to review, challenge, and reject auto insurance rate increases for the first time in state history. He also signed a companion measure, House Bill 4273, that applies a similar review process to homeowners insurance.
If you have opened a renewal notice in the last three years and wondered how a policy with no claims, no tickets, and no changes went up by double digits, this is the legislation aimed at that experience.
We have been fielding calls about it from clients in Wilmette, Wicker Park, Lakeview, Elmhurst, Evanston, and across the Chicago area. Here is a practical breakdown of what the law does, what it does not do, and what we are advising clients to consider between now and the day it takes effect.
What Illinois SB 714 Actually Does
Senate Bill 714 was a four-year effort led by Illinois Secretary of State Alexi Giannoulias and built on his statewide Driving Change campaign. The core provisions are straightforward:
- The Department of Insurance can now review rate filings. Carriers doing business in Illinois will have to submit proposed rate changes to the state. Regulators will have authority to challenge increases they consider excessive, inadequate, or unfairly discriminatory. If the Department determines consumers were overcharged, it can order rebates.
- Thirty days’ notice is required for auto increases above 10 percent. If your auto renewal is coming in more than 10 percent higher than your expiring premium, your carrier has to notify you 30 days before your renewal date. Under the homeowners bill, the notice period is 60 days.
- Rates must reflect Illinois losses. The law prohibits carriers from shifting the cost of out-of-state catastrophe losses onto Illinois policyholders. It also requires carriers to use credible Illinois-specific claims data when developing rates.
- Defensive driving discounts are expanded. The law builds out a framework for premium discounts tied to a modernized National Safety Council defensive driving course, with expanded access for drivers 55 and older.
Both laws take effect July 1, 2027. That date matters because renewals before then are still governed by the current Illinois framework.
Why This Is a Bigger Deal Than It Sounds
Before these bills were signed, Illinois and Wyoming were the only two states in the country that did not exercise any regulatory control over insurance rates. Illinois operated under an open competition model, meaning carriers set their prices and the market was expected to sort it out.
In theory, competition disciplines pricing. In practice, Illinois consumers have watched steep increases land with no real mechanism to ask why.
The numbers behind the political push are real. Illinois-based State Farm announced an average 27.2 percent statewide homeowners increase a little over a year ago. Illinois drivers absorbed an average 18 percent auto increase roughly two years ago, according to the Secretary of State’s office. Carriers pointed to inflation, the rising cost of vehicle repairs, and the increasing frequency of severe weather. Those explanations were largely accurate. What was missing was independent verification.
It is also worth noting that the auto market has already softened. State Farm has publicly said its Illinois auto premiums came down an average of 15 percent in 2025. The pricing cycle was already turning before this bill reached the Governor’s desk.
What the New Law Does Not Do
This is where the fine print matters. The headlines can make the law sound stronger than it is.
- It is not a rate freeze and it is not a rate cap. Nothing in this law prevents your premium from going up. It requires that increases be justified with credible data. A well-supported 12 percent increase is still a 12 percent increase.
- It does not take effect until July 1, 2027. You still have renewals ahead of you under the current rules. Any increase landing before then is governed by the existing framework.
- It did not ban credit-based insurance scores or ZIP code rating. Giannoulias pushed hard on the argument that carriers were pricing policies on factors unrelated to driving records. The final bill does not specifically prohibit those factors. It prohibits rates that are unfairly discriminatory, which leaves the Department of Insurance, and eventually the courts, to define the limits.
- It may not do what everyone expects. Insurance trade groups opposed both bills, arguing that they do not address the underlying cost drivers of repairs, medical care, and litigation. They also warned that added regulatory friction can reduce competition and coverage choices over time. That is a self-interested argument, but it is not baseless. Rate regulation has produced very different outcomes in different states.
What We Are Advising Our Clients to Do
Here is our read as an independent agency that places business with multiple carriers and watches rate movement across the market.
1. Take a Serious Look at Long-Term Rate Stability Products
If premium volatility is the thing that frustrates you, the most direct fix available today is a product designed to reduce that volatility. ERIE Rate Lock is the clearest example in the Illinois market.
Once Rate Lock is on your eligible auto policy, your premium does not change year over year simply because the market changed. It changes only when you make specific changes yourself, such as adding or removing a vehicle, adding or removing a driver, changing your primary residence, changing coverages, or changing your payment plan.
That is a fundamentally different relationship with your renewal than most drivers have. It is not free, eligibility requirements apply, and it is not automatically the right answer for a household that is about to add a teen driver or move. But for a settled household with stable vehicles and a clean record, it can remove the single most aggravating variable in personal insurance. We are recommending that clients at least price it out.
2. Consolidate Home, Auto, and Umbrella With One Carrier
This is the piece we feel most strongly about, though it is our expectation rather than a certainty.
When regulators gain authority to scrutinize base rate increases, carriers tend to compete harder on the levers that are not base rates. Discounts, credits, and account-level pricing get more attention. We expect Illinois carriers to lean into multi-policy discounts as the new regime approaches because a bundled account is typically more profitable, longer-tenured, and better understood from an underwriting standpoint.
The practical implication is simple: households that carry home, auto, and umbrella coverage with the same carrier should generally be better positioned than households with policies scattered across three different companies. Monoline auto customers, especially in higher-rated Chicago territories, are more likely to feel the sharp end of any increase that does get approved. If your policies are split, this is a good year to look at consolidating them.
An umbrella policy is often the piece people skip. It is usually one of the least expensive coverages in the household and frequently the one that helps unlock a stronger account credit, in addition to the liability protection itself.
3. Read the Notice When It Arrives
Starting in July 2027, a notice of an increase above 10 percent should be your cue to call your agent, not your cue to file the letter away and pay the bill. Thirty days is enough time to re-shop the account properly if it makes sense, or to confirm that the increase is in line with the market and stay put.
4. If You Are 55 or Older, Ask About the Defensive Driving Course
The expanded National Safety Council discount is one of the few provisions with a straightforward dollar value. Ask your agent to check what your specific carrier is filing and whether the course is worth completing for your household.
5. Do Not Wait for July 2027
The single most useful thing you can do is have someone review your full account this year. Coverage limits that made sense in 2019 do not necessarily make sense at current construction and vehicle replacement costs. The households that get surprised at renewal are almost always the ones nobody has reviewed in years.
The Bottom Line
Illinois just gave itself a tool it has never had. Whether it lowers anyone’s premium is genuinely an open question, and we would be doing you a disservice to promise otherwise. What we can say confidently is that the market is going to reshape itself between now and July 2027. The households positioned well before that happens will be the ones with stable, consolidated, properly reviewed accounts.
If you would like us to take a look at yours, run a rate stability quote, or price out what consolidating your home, auto, and umbrella would actually save you, we are happy to help. Longmeadow Insurance works with drivers and homeowners across the Chicago area, from the North Shore to the western suburbs to city neighborhoods, and reviewing an account costs you nothing.