When you're going head to head with your car insurance company to negotiate your insurance rates it's easy to feel like you're dealing with an omnipotent being with the freedom to do just about anything they want. After all, it's pretty hard for you to see otherwise! They do a good job of letting you know it's their way or the highway (or not, as the case may be-most states aren't going to let you out on the road without decent insurance coverage). What they don't tell you is that they've always got someone watching their every move the way they're sitting there watching yours.

Every state has an insurance department (or insurance bureau, or whatever name they decide to give it). That insurance department does two things. First, it monitors the insurance companies (including health, life and auto insurance companies) to make sure they're walking the straight and narrow and aren't setting car insurance rates higher than state drivers can afford. I'm not sure what the actual algorithm is that they use to determine how high they're going to go, but they do make sure car insurance companies aren't given a completely free reign.

State insurance departments also exist to keep consumers educated on insurance issues in and around the state, which brings us to part two of how insurance companies stay in line-competition and a limited pool of consumers. Long gone are the days when consumers only had one choice with regard to their insurance. There are over 50 companies currently doing business in the U.S., and that's just talking about companies with a national reach. There's very little data on the number of small, local insurance companies that have managed to hang on to enough drivers to stay in business.

When you've got more than one car insurance company competing for a driver's business you're going to walk right into a pricing war. Every company offers their own services, but those tend to work in a very small square of offerings. For example, just about every company you talk to is going to be able to provide you with comprehensive, collision and liability, as well as emergency roadside assistance, rental insurance and additional medical coverage.

And when you get right down to it, that's really all the average driver with an average (non-collectible) car really needs.

With very little difference in offerings from one company to another consumers are going to look to the next thing on their priority list-the price. The car insurance company with the highest insurance rates probably isn't going to be the one that brings home the bacon (the largest number of drivers insured by their company at the end of the day). Drivers, especially in today's restricted economy, are looking for ways to save money, not spend more. If they really let their rates go flying they're going to be out of business before too much longer.

So between state regulatory organizations and consumer demand car insurance companies are just as restricted in how high they can raise their rates as any other business. It's just not always apparent until you do a little digging.