§ 2632.5. Rating Factors.
10 CA ADC § 2632.5Barclays Official California Code of Regulations
10 CCR § 2632.5
§ 2632.5. Rating Factors.
(a) Every insurer offering or issuing a policy of automobile insurance shall establish a class plan for the calculation of rates that specifies rating factors in accordance with this section and which complies with the good driver discount requirements of California Insurance Code Section 1861.02 and all other statutes providing discounts in automobile insurance rates and premiums.
(b) Each insurer may only use the characteristics of one driver to rate each vehicle except as provided for in section 2632.5(d)(12) and section 2632.5(c)(2). If there are more vehicles on a policy than drivers, the insurer shall assign either a rate for an undesignated driver or the lowest rate for all driver related factors to the excess vehicles.
(A) the public record of traffic violation convictions available from the California Department of Motor Vehicles, together with similar public records of traffic violation convictions that are available from other jurisdictions (hereinafter sometimes referred to as the “Motor Vehicle Report” or “MVR”). To determine a driver's safety record for purposes of California Insurance Code Sections 1861.02(a)(1) and 1861.025, each insurer shall verify a driver's current driving safety record as contained in the MVR for every driver listed on the policy at the time of policy application, and for each new driver added to the policy at the time the driver is added, and no less frequently than every 36 months thereafter, if the policy remains in effect. No insurer shall rate or underwrite a renewal policy based upon an MVR older than 36 months at the time the policy is renewed. However, nothing in this section shall be construed to preclude an insurer from obtaining, for the time periods set forth in this regulation, a report from an insurance-support organization or other third party which establishes that a new MVR would contain only the information already found on the MVR the insurer most recently obtained. When an insurer has such a report for a particular driver, the insurer is not required to obtain a new MVR for that driver. Additionally, nothing in this section shall be construed to preclude an insurer from granting a discount based on a driving record longer than 36 months as long as the insurer verifies a driver's record as set forth in this section;
Except as provided in section (c)(2)(F) this factor means the estimated annual mileage for the insured vehicle during the 12 month period following the inception of the policy. Insurers may not retroactively or prospectively adjust premiums based on actual miles driven unless notice is provided to the policyholder prior to the effective date of the policy. Estimated annual mileage shall be determined only as follows and except as otherwise set forth in this section, an insurer shall use the applicant's estimated annual mileage:
(i) During the application process, or when a vehicle is being added or replaced during the term of the policy, the applicant shall provide the miles the applicant expects each vehicle to be insured will be driven during the 12-month period following policy inception. The insurer may also require or request, as set forth in sections (C) and (D) below, information from the applicant during this process necessary to support the estimate.
(ii) If an applicant does not provide the estimated annual miles the applicant expects to drive or the information required pursuant to (C) below or if the information provided does not support the applicant's estimated annual miles, an insurer may issue a policy using a reasonable objective mileage estimate based upon the information provided pursuant to sections (C), (D) and (E) below or, if a reasonable estimate cannot be determined, using a default annual mileage figure which has been filed with and approved by the Commissioner pursuant to California Insurance Code Section 1861.02. Before doing so, the insurer shall inform the applicant of the mileage figure which it will use to rate the policy.
(i) During the renewal process, an insurer shall, at least every three years, request a policyholder to provide the estimated annual miles the policyholder expects each vehicle to be insured will be driven during the 12 month period following policy renewal. The insurer may also require or request, as set forth in sections (C) and (D) below, information from the policyholder necessary to support the estimate. The request may be made with the renewal notice. An insurer may, if not requesting updated information, use the mileage figure from the expiring policy or use a reasonable objective mileage estimate solely based upon the information set forth in (C), (D) and (E) below.
(F) The Commissioner finds that basing the Second Mandatory Rating Factor on verified actual miles driven, rather than on estimated miles driven, may enable policyholders to reduce their premiums by driving less and create incentives for innovation in automobile insurance rating in California with numerous attendant benefits. Therefore, notwithstanding sections (c)(2)(A), (B), (C), (D) and (E), an insurer may offer an automobile insurance program that uses verified actual mileage rather than estimated mileage to determine the Second Mandatory Factor.
An insurer may offer a verified actual mileage program instead of, or in addition to, an estimated mileage program offered pursuant to sections (c)(2)(A), (B), (C), (D) and (E). An insurer offering both estimation and verification methods for determining mileage for the second mandatory rating factor may require an insured who chooses verified mileage for one vehicle to choose verified mileage for all vehicles insured under the same policy.
3. by odometer readings obtained from smog check stations licensed by the California Bureau of Automotive Repair, from the California Department of Motor Vehicles, or any other governmental agency that maintains public records of vehicle odometer readings. Any odometer readings obtained pursuant to this section shall be provided to the insurer by the policyholder, the California Bureau of Automotive Repair, the California Department of Motor Vehicles, any government agency that maintains odometer readings, or a vendor retained by the insurer.
• An insurer shall only use a technological device to collect information for determining actual miles driven under the Second Mandatory Factor.
• An insurer shall not use a technological device to collect or store information about the location of the insured vehicle.
(iii) An insurer that offers both a mileage estimation program and a verified actual mileage program may provide a discount to a policyholder who participates in a verified actual mileage program. Any discount provided under section (c)(2)(F) shall be based on demonstrated cost savings or actuarial accuracy associated with obtaining and using actual miles driven rather than estimated mileage. If an insurer offers a discount, under section (c)(2)(F) all policyholders in the verified actual mileage program, regardless of the method of verification used, shall qualify for a discount.
(iv) If an insurer offers both an estimated mileage program and a verified actual mileage program, participation by a policyholder in a program to determine actual mileage shall be voluntary. An insurer offering an estimated mileage program shall not require any policyholder to participate in a program to provide verified actual mileage.
(viii) An insurer employing verified actual mileage pursuant to section (c)(2)(F) may combine Percent Use, Academic Standing, Marital Status, and Driver Training with the Second Mandatory Rating Factor. If an insurer elects to do so, the insurer shall demonstrate in its class plan that the rating factors used in combination, when considered individually, comply with the weight ordering requirements of Section 2632.8.
(3) “Third Mandatory Factor” as used in Subchapter 4.7, is the number of years of driving experience the insured has, per California Insurance Code Section 1861.02(a)(3). This factor means number of years of experience that the driver rated on the insured vehicle has been licensed to drive in any jurisdiction. To the extent that a policy provides coverage for motorcycles or motor-driven cycles, as defined in California Vehicle Code Sections 400 and 405, this factor shall refer to the number of years that the driver rated on the insured vehicle has been licensed to drive such vehicles in any jurisdiction.
These categories shall be based on grouping the zip codes in the state into bands. Alternately, the bands could be based on grouping the census tracts in the state. Each band shall contain areas with a similar average claims frequency. In the event that the data for a zip code or census tract is not fully credible, the adjustment process described in Section 2632.9(d) shall be followed;
(15) Relative claims severity. This factor shall contain a maximum of twenty categories and shall reflect where the insured vehicle is garaged. These categories shall be based on grouping the zip codes in the state into bands. Alternately, the bands could be based on grouping the census tracts in the state. Each band shall contain areas with a similar average claims severity. In the event that the data for a zip code or census tract is not fully credible, the adjustment process described in Section 2632.9(d) shall be followed.
(e) Except as expressly provided in this subsection and in section 2632.5(c)(2)(F)(viii) the three mandatory factors may not be combined with any other factor. Optional rating factors for Percent Use, Academic Standing, Marital Status, and Driver Training may be combined with number of years of driving experience. If an insurer elects to combine number of years of driving experience with Percent Use, Academic Standing, Marital Status, or Driver Training, the insurer shall demonstrate in its class plan that the rating factors used in combination, when considered individually, comply with the weight ordering requirements of Section 2632.8.
Credits
Note: Authority cited: Section 1861.02, Insurance Code; and CalFarm Insurance Company v. Deukmejian (1989) 48 Cal. 3d 805. Reference: Sections 1861.02, 1861.025, 1861.05, 11628 and 11628.3, Insurance Code.
History
1. New section filed 12-15-89 as an emergency; operative 12-15-89 (Register 90, No. 3). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 4-14-90.
2. New section filed 4-13-90 as an emergency; operative 4-15-90 (Register 90, No. 17). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 8-13-90.
3. New section filed 8-6-90 as an emergency; operative 8-6-90 (Register 90, No. 43). A Certificate of Compliance must be transmitted to OAL by 12-4-90 or emergency language will be repealed by operation of law on the following day.
4. New section refiled 8-13-90 as an emergency; operative 8-13-90 (Register 90, No. 43). A Certificate of Compliance must be transmitted to OAL by 12-12-90 or emergency language will be repealed by operation of law on the following day.
5. Readoption of 8-6-90 emergency order filed 11-30-90 as an emergency; operative 11-30-90 (Register 91, No. 4). A Certificate of Compliance must be transmitted to OAL by 4-1-91 or emergency language will be repealed by operation of law on the following day.
6. Readoption of 8-13-90 emergency order filed 12-12-90 as an emergency; operative 12-12-90 (Register 91, No. 4). A Certificate of Compliance must be transmitted to OAL by 4-11-91 or emergency language will be repealed by operation of law on the following day.
7. Editorial correction of History 6 correcting operative date (Register 91, No. 21).
8. Readoption of 11-30-90 emergency order filed 3-29-91 as an emergency; operative 3-29-91 (Register 91, No. 21). A Certificate of Compliance must be transmitted to OAL by 7-29-91 or emergency language will be repealed by operation of law on the following day.
9. Readoption of emergency order filed 7-26-91 as an emergency; operative 7-26-91 (Register 92, No. 4). A Certificate of Compliance must be transmitted to OAL 11-25-91 or emergency language will be repealed by operation of law on the following day.
10. Readoption of emergency order filed 11-27-91 as an emergency; operative 11-27-91 (Register 92, No. 13). A Certificate of Compliance must be transmitted to OAL 3-26-92 or emergency language will be repealed by operation of law on the following day.
11. Readoption of emergency order, including repealer of italicized text, filed 3-25-92; operative 3-25-92 (Register 92, No. 20). A Certificate of Compliance must be transmitted to OAL 7-23-92 or emergency language will be repealed by operation of law on the following day.
12. Editorial correction restoring article 3 heading (Register 92, No. 20).
13. Readoption of emergency order filed 7-22-92 as an emergency; operative 7-22-92 (Register 92, No. 30). A Certificate of Compliance must be transmitted to OAL 11-19-92 or emergency language will be repealed by operation of law on the following day.
14. Readoption of emergency order filed 11-19-92 as an emergency; operative 11-19-92 (Register 92, No. 47). A Certificate of Compliance must be transmitted to OAL 3-19-92 or emergency language will be repealed by operation of law on the following day.
15. Readoption of emergency order filed 3-26-93 as an emergency; operative 3-26-93 (Register 93, No. 13). A Certificate of Compliance must be transmitted to OAL 7-26-93 or emergency language will be repealed by operation of law on the following day.
16. Readoption of emergency order filed 7-22-93 as an emergency; operative 7-22-93 (Register 93, No. 30). A Certificate of Compliance must be transmitted to OAL by 11-19-93 or emergency language will be repealed by operation of law on the following day.
17. Readoption of emergency order filed 11-18-93 as an emergency; operative 11-18-93 (Register 93, No. 47). A Certificate of Compliance must be transmitted to OAL by 3-18-94 or emergency language will be repealed by operation of law on the following day.
18. Readoption of emergency order filed 3-17-94 as an emergency; operative 3-17-94 (Register 94, No. 11). A Certificate of Compliance must be transmitted to OAL by 7-14-94 or emergency language will be repealed by operation of law on the following day.
19. Certificate of Compliance as to 3-17-94 order including repealer and new section transmitted to OAL 7-12-94; disapproved by OAL 8-23-94 (Register 94, No. 34).
20. New section filed 2-23-95 as an emergency; operative 2-23-95 (Register 95, No. 8). A Certificate of Compliance must be transmitted to OAL by 6-23-95 or emergency language will be repealed by operation of law on the following day.
21. New section including amendment of subsection (c)(22) refiled 7-5-95 as an emergency; operative 7-5-95 (Register 95, No. 27). A Certificate of Compliance must be transmitted to OAL by 11-2-95 or emergency language will be repealed by operation of law on the following day.
22. Repealed by operation of Government Code section 11346.1(g) 11-3-95 (Register 96, No. 37).
23. Editorial correction of subsection (c)(22) and History 21 (Register 95, No. 49).
24. New section refiled 12-5-95 as an emergency; operative 12-5-95 (Register 95, No. 49). A Certificate of Compliance must be transmitted to OAL by 4-3-96 or emergency language will be repealed by operation of law on the following day.
25. Repealed by operation of Government Code section 11346.1(g) (Register 96, No. 27).
26. New section filed 7-5-96; operative 8-4-96 (Register 96, No. 27).
27. Editorial correction of subsection (d)(10) and adding new History 22 and History renumbering (Register 96, No. 37).
28. Repealer of subsection (d)(14) and new subsection (d)(14) filed 5-5-97 as an emergency; operative 5-5-97 (Register 97, No. 19). A Certificate of Compliance must be transmitted to OAL by 9-2-97 or emergency language will be repealed by operation of law on the following day.
29. Reinstatement of subsection (d)(14) as it existed prior to 5-5-97 emergency amendment by operation of Government Code section 11346.1(f) (Register 97, No. 38).
30. Repealer of subsection (d)(14) and new subsection (d)(14) filed 9-15-97; operative 9-15-97 (Register 97, No. 38). A Certificate of Compliance must be transmitted to OAL by 1-13-98 or emergency language will be repealed by operation of law on the following day.
31. Reinstatement of subsection (d)(14) as it existed prior to 9-15-97 emergency amendment by operation of Government Code section 11346.1(f) (Register 98, No. 10).
32. Repealer and new subsection (d)(14) filed 3-5-98; operative 3-5-98 pursuant to Government Code section 11343.4(d) (Register 98, No. 10).
33. Editorial correction inserting word inadvertently omitted from subsection (b) (Register 99, No. 41).
34. Editorial correction of subsection (b) (Register 2002, No. 17).
35. Amendment of subsection (d)(11) and new subsections (d)(11)(A)-(E) filed 8-27-2002; operative 9-26-2002 (Register 2002, No. 35).
36. Amendment of subsection (c)(1)(A) and Note filed 2-27-2006; operative 4-28-2006 (Register 2006, No. 9).
37. Amendment of subsections (d)(15)-(e) filed 7-14-2006; operative 8-13-2006 (Register 2006, No. 28).
38. Amendment of subsection (c)(2) and new subsections (c)(2)(A)-(H) filed 12-29-2006; operative 2-27-2007 (Register 2006, No. 52).
39. Amendment of subsections (b), (c)(2) and (c)(2)(E), new subsections (c)(2)(F)-(c)(2)(F)(viii), subsection relettering and amendment of subsection (e) filed 10-15-2009; operative 10-15-2009 pursuant to Government Code section 11343.4 (Register 2009, No. 42).
40. Repealer of subsection (d)(9), subsection renumbering and amendment of newly designated subsection (d)(12) and subsection (e) filed 12-31-2018; operative 1-1-2019. Submitted to OAL for filing and printing only pursuant to Government Code section 11340.9(g) (Register 2019, No. 1).
41. Change without regulatory effect amending subsections (c)(2), (c)(2)(A)(i)-(ii) and (c)(2)(B)(i) filed 7-14-2021 pursuant to section 100, title 1, California Code of Regulations (Register 2021, No. 29). Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20.
42. Change without regulatory effect amending subsection (b) filed 2-1-2024 pursuant to section 100, title 1, California Code of Regulations (Register 2024, No. 5).
This database is current through 6/14/24 Register 2024, No. 24.
Cal. Admin. Code tit. 10, § 2632.5, 10 CA ADC § 2632.5
End of Document |