Consumer Rights/Protections Related to Automobile Insurance


In November of 1988 Proposition 103 (Prop. 103) was enacted into law by the voters of California. Prop. 103 provides many consumer protections related to purchasing and maintaining automobile insurance. 

The following are some of the key provisions of Prop. 103 which protect your rights as an insurance consumer:

Good Driver Provision

Prop. 103 established a legal definition of a "Good Driver" in this state. As defined, a Good Driver is a person who has been licensed for at least three consecutive years and has no more than one point on his or her driving record. Certain major violations may be considered for periods of seven, e.g., a DUI (Driving Under the Influence).

Every Automobile Insurance Company Licensed in California Must Offer Coverage for Good Drivers

No insurer can refuse to offer coverage if you qualify as a Good Driver. If you are a Good Driver and you are denied the opportunity to buy insurance from the company of your choice, then call the California Department of Insurance for assistance. Also, it is important to note that your rates as a Good Driver must be at least 20% lower than a non-Good Driver's rates would be at the same insurance company.

Cancellation/Nonrenewal Provisions

Prop. 103 established new criteria which determine an insurer's ability to cancel or non-renew your policy.  There are only three reasons an automobile policy can be canceled/non-renewed once it is issued:

  1. Fraud/material misrepresentation
  2. Non-payment of premium
  3. Substantial increase in the hazard insured against

Note: In relation to a cancellation for nonpayment of premium, your insurer must provide you with 10-day written notice after the payment due date before the insurer can effectively cancel the policy. This gives you an opportunity to pay the past due premium and keep the policy in force or to secure other insurance.

Determination of Rates

Prop. 103 established uniform guidelines upon which your auto rates would be determined. The primary factors are as follows:

  • The operator's driving safety record
  • The number of miles driven annually
  • The number of years of driving experience

There are 16 secondary rating factors which may be used in any combination to determine your specific rates and calculate your individual premium based on an insurance company's filing with the California Department of Insurance (CDI). The secondary factors must not be weighted as heavily as the primary factors in the rate premium calculation. These secondary rating factors may include marital status, frequency and severity of claims in the geographic area where your car is garaged, gender, vehicle type, etc.

This page is meant as an overview only. For more details and a complete description of Prop. 103, as well as a link to the exact wording of the Prop. 103, see the California Department of Insurance Web site.