Is there a minimum amount that must be charged for auto insurance premiums?

Question

Some companies determine insurance premiums by actuaries, but is there by law a minimum that needs to be charged to policy holders? What risks or fines would a company face if its insurance premiums were a charged at too low an amount?

Answer 1

If the insurance company doesn't charge enough in premiums, they won't have enough money to pay the claims of their customers.  So the risk they have is becoming financially unstable and going out of business.

Each state has minimum auto insurance requirements, so most companies do have a type of minimum amount they have to charge to cover their costs and meet that minimum coverage.

Answer 2

No, there is no law.   But just for your information, some states have auto insurance programs for people of low income.

If you live in California try this government website:

www.aipso,com/lc

Answer 3

No, there is no minimum by law.