Maryland’s new law lets its state auto insurer charge some low-income drivers less, while reshaping the assessment burden for carriers.
That is the effect of House Bill 816, signed into law on May 26, 2026, as Chapter 741. The law reworks the Maryland Automobile Insurance Fund, the state program that covers drivers who cannot buy a policy from a regular carrier. It rewrites the Fund's purpose so it must deliver that coverage at affordable rates, not simply make coverage available.
At the center is a new affordability program. The law defines it as one that limits the maximum premium for a private passenger auto policy issued by the Fund at an amount that may be inadequate. Put plainly, the Fund can charge some drivers less than the coverage is actually worth.
The program comes with limits. The Fund's executive director can launch it only with the insurance commissioner's review and approval, and only if rates are not excessive or unfairly discriminatory. It also cannot create an overall inadequacy greater than 20% of the Fund's net written premium, and it cannot push the assessment allocation percentage past the limit set in the law. To qualify, a driver has to be eligible as a Fund policyholder and have household income no higher than 250% of the federal poverty level.
The commissioner keeps oversight. The law gives the commissioner power to order changes if the rates stop meeting the requirements, if the program breaches its inadequacy or assessment limits, or if it runs afoul of other parts of the insurance code. But there is a notable carve-out: the commissioner cannot block or force changes to the program simply because the Fund falls short on the capital requirement under one section of the code.
The part carriers should watch sits in the assessment math. The Fund is supported through assessments on the members of the Industry Automobile Insurance Association. The law lowers the cap on the private passenger auto division's assessment allocation percentage from 3% to 1%. That percentage is calculated by the Association's board, which divides the most recent certified assessment by the relevant net direct written premiums.
The law takes effect July 1, 2027.
