Skip to main content
S2431AInsurance

Insurance - Casualty Insurance Rating

This bill requires auto insurance companies to use municipal data within a shared zip code to lower driver premiums.

Introduced30 Yea8 Nay0 Not voting
Population
Affected
72
Email Legislator
Introduced Feb 6, 2026Committee Senate Commerce

Plain-English Summary

This bill changes how auto insurance companies use zip codes to calculate premiums for policies issued or renewed after July 1, 2027. Insurers must look at the specific municipality where a car is kept within a shared zip code. If the accident data for that specific town would result in a lower rate than the entire zip code's data, the insurer must give the driver the lower rate. If the town's data would cause a higher rate, the insurer must use the overall zip code rate. It limits statewide fee increases for implementing this rule to 25 cents per month.

For younger readers

Sometimes different towns share the exact same zip code. This bill changes how car insurance companies charge people who share a zip code. Car insurance is money people pay to help fix their car if it gets broken. Starting in 2027, companies must look at the specific town where a car is parked. If the town is safer than the rest of the zip code, the driver gets a cheaper price. If the town has more accidents, the driver just pays the normal zip code price. It makes sure people get the lowest price possible.

Who & Where It Applies

Impacted groups
Auto insurance companiesRhode Island driversDepartment of Business RegulationDrivers in shared zip codesAuto insurance actuaries
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
Auto Insurance Policyholders: Up to $0.25/month ($3.00/year)
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Prevents unfair financial penalties for drivers living in safer municipalities that share a zip code with areas that have higher accident rates, promoting economic fairness.
  • Protects consumers by mandating that insurers use whichever data point (the municipality or the whole zip code) results in the lowest premium, keeping insurance costs down for working-class individuals.
  • Includes strict regulatory oversight by requiring the Department of Business Regulation to certify that no systemic premium increases occur, protecting the public from corporate price gouging.
  • Allows insurance companies to pass an implementation fee of up to 25 cents per month onto all consumers, which slightly increases the financial burden on low-income drivers.
  • Fails to completely eliminate the use of zip codes in determining insurance rates, a practice often criticized for perpetuating systemic racism and income inequality (redlining).
  • Delays the implementation of these consumer protections until July 1, 2027, leaving drivers vulnerable to unfair zip code-based pricing for several more years.
For Conservatives
  • Allows insurance companies to pass the administrative costs of implementing these new municipal calculations directly onto consumers via a statewide premium increase.
  • Preserves the ability of insurance companies to utilize geographic data (zip codes) in their risk assessment and premium calculation models, rather than banning the practice entirely.
  • Provides a long lead time (until July 1, 2027) for insurance companies to adjust their actuarial models and billing systems, minimizing immediate disruption to business operations.
  • Imposes new government regulations on private insurance companies, dictating exactly how they must calculate and apply geographic risk data to their pricing models.
  • Forces insurance companies to artificially cap rates by always requiring them to use the lower premium option between the municipal segment and the overall zip code, distorting free-market risk pricing.
  • Expands the authority of the Department of Business Regulation by requiring them to monitor and certify that companies are not increasing premiums as a result of the new rules.

Votes

Loading votes...

Full Bill Text

2 versions
Changes to existing Rhode Island law · 18 additions

SECTION 1. Section 27-9-4 of the General Laws in Chapter 27-9 entitled "Casualty Insurance Rating" is hereby amended to read as follows: 27-9-4. Considerations in making of rates -- Cancellation of policy. [Effective January 1, 2026.]

(a) All rates shall be made in accordance with the following provisions: (1)(i) Due consideration shall be given to past and prospective loss experience within and outside this state, to catastrophe hazards, if any, to a reasonable margin for underwriting profit and contingencies, to dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers, to past and prospective expenses both countrywide and those specially applicable to this state, and to all other relevant factors within and outside this state; provided, that no consideration shall be given to:

(A) Any loss or incident involving a bus driver, while in the course of the bus driver’s employment for the Rhode Island public transit authority or private or municipal school bus companies, in establishing or maintaining that driver’s rate respecting the operation of a personal motor vehicle or vehicles;

(B) Any loss or incident involving a law enforcement officer, while in the course of the law enforcement officer’s employment for the state, city, town police departments, or federal law enforcement agency, in establishing or maintaining that driver’s rate respecting the operation of a personal motor vehicle or vehicles; and

(C) Any loss or incident involving a commercial vehicle driver, while in the course of the commercial vehicle driver’s employment, in establishing or maintaining that driver’s rate respecting the operation of a personal motor vehicle(s);

(ii) It shall be the responsibility of a commercial vehicle driver to provide the commercial vehicle driver’s insurance company with proof that the loss or incident took place in the course of employment while operating a commercial vehicle. For the purposes of this section, a “commercial vehicle” shall be a motor vehicle with a gross weight in excess of ten thousand pounds (10,000 lbs.) or a motor vehicle used for public livery;

(2) The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any insurer or group with respect to any kind of insurance, or with respect to any subdivision or combination of insurance for which subdivision or combination separate expense provisions are applicable;

(3) Risks may be grouped by classifications for the establishment of rates and minimum premiums;

(4) Rates shall not be excessive, inadequate, or unfairly discriminatory;

(5) For any policy written, delivered, or renewed on or after January 1, 2025, in establishing or maintaining an insured’s rate or classification respecting the operation of a personal motor vehicle, widowed persons shall not be treated differently than persons in a marriage; and

(6) In establishing or maintaining an insured’s rate or classification respecting the operation of a personal motor vehicle, any insured sixty-five (65) years of age or older, who meets the criteria set forth in this section and has not had any chargeable accidents or moving violations within three

(3) years preceding the establishment of the rate of insurance or classification, shall not be penalized solely by reason of his or her age.

(b) No insurance company shall fail to renew a private passenger automobile policy because of a loss occurrence only, unless a chargeable loss occurrence of three thousand dollars ($3,000) or more than two (2) nonchargeable loss occurrences, involving the insured, have taken place within the annual policy year. (c)(1) No insurance company shall fail to renew a private passenger automobile policy solely because the insured has attained the age of sixty-five (65) years or older.

(2) Whenever the commissioner of insurance shall have reason to believe that any insurance company has refused to renew a private passenger automobile policy solely because the applicant has reached the age of sixty-five (65) years or older, the commissioner shall notify the company that it may be in violation of this section and in the commissioner’s discretion the commissioner may require a hearing to determine whether or not the company has actually been engaged in the practice stated in this subsection. Any hearing held under this section shall in all respects comply with the hearing procedure provided in the Administrative Procedures Act, chapter 35 of title 42.

(3) If after the hearing the commissioner shall determine that the company has engaged in the practice of systematically failing to renew private passenger automobile policies because of the advanced age of the insured, the commissioner shall reduce the commissioner’s findings to writing and shall issue and cause to be served upon the company an order to cease and desist from engaging in those practices. After the issuance of the cease and desist order, if the commissioner finds that the company has continued to engage in those practices, the commissioner shall impose upon the company a fine not to exceed the amount of one thousand dollars ($1,000) for each separate violation.

(4) Any company aggrieved by any order or decision of the commissioner of insurance may appeal the order and decision to the superior court of Providence in accordance with the Administrative Procedures Act, chapter 35 of title 42.

(d) No insurance group, carrier, or company in establishing any premium surcharge or penalty relative to a specific motor vehicle policy, shall consider any accident or any claim where any insured covered by that policy is fifty percent (50%) or less at fault.

(e) No insurance group, carrier, or company shall assess any premium surcharge against any insured covered by a motor vehicle policy where a property damage claim payment is less than three thousand dollars ($3,000).

(f) No insurance group, carrier, or company shall refuse to issue motor vehicle liability insurance, impose a surcharge, or otherwise increase the rate for a motor vehicle policy solely because the applicant is a volunteer driver. Volunteer driver is defined as a person who provides services without compensation to a nonprofit agency or charitable organization.

(g) No group, carrier, or company providing personal lines insurance as defined in § 27- 14.5-1 shall assess any premium surcharge or penalty against an insured inquiring about the specific terms of their policy. Nothing in this subsection shall be construed to prevent an insurance group, carrier, or company from assessing a premium surcharge, change in rating, or penalty as a result of a policy change or loss.

(h) For all policies issued or renewed on or after July 1, 2027, an insurer issuing motor vehicle liability insurance which utilizes the zip code of where a vehicle is garaged when calculating their policy premium may do so; provided that:

(1) The calculation of the zip code is segmented by the municipality where the vehicle is garaged;

(2) If the actuarial data within a municipal segment of the zip code support a lower premium than the actuarial data for the zip code as a whole, the premium derived from the actuarial data for the municipal segment shall be used;

(3) If the actuarial data within a municipal segment of the zip code support a higher premium than the actuarial data for the zip code as a whole, the premium derived from the actuarial data for the zip code as a whole shall be used; and

(4) The department of business regulation shall certify that no premium is increased as a result of this subsection; provided however the department of business regulations may permit insurers to apply a uniform statewide increase not to exceed twenty-five cents ($0.25) per month to all premiums for motor vehicle liability insurance that the insurer issues in the State of Rhode Island to absorb the costs of the implementation of this subsection.

SECTION 2. This act shall take effect upon passage.