What California Law Gives You as a Car Insurance Customer

On this page:

• When you buy a policy
• While the policy is in force
• When a policy ends
• When you make a claim
• When a decision goes against you
• The rights at a glance

Most people learn their rights one at a time, usually at the worst moment: a cancellation letter, a denied claim, a renewal that makes no sense. This guide puts them in one place, in the order you meet them. Each right comes from a statute or regulation you can read for yourself, and the table at the end sums them up.

When you buy a policy

The Good Driver Discount is a legal entitlement. Under Insurance Code section 1861.02, everyone who meets the good driver criteria in section 1861.025 is qualified to buy a Good Driver Discount policy from the insurer of their choice, and that policy must be priced at least 20 percent below what the same driver would otherwise pay for the same coverage. In short, a good driver has been licensed for the past three years, has no more than one violation point in that time, has no at-fault accident causing injury or death in that time, and has no DUI conviction in the past ten years.

Your price must come from approved factors. California requires rates to be set first by your driving safety record, then by your annual mileage, then by your years of driving experience. Other factors are allowed only as the Insurance Commissioner permits by regulation, and the permitted list does not include your credit score or your gender.

Having no prior insurance is not, by itself, a reason to refuse or surcharge you. Section 1861.02 says the absence of prior coverage, in and of itself, cannot be a criterion for Good Driver Discount eligibility or for rates, premiums or insurability.

You must hear about the low-cost program. Under section 11629.745, an agent or broker in a county where the state's Low Cost Automobile Insurance policy is available must tell a new customer who asks for minimum-limits coverage that the low-cost policy may be available to qualifying drivers, before the application.

While the policy is in force

• Uninsured motorist coverage is included with bodily injury liability unless the named insured signs a written agreement deleting it or choosing lower limits.
• No one can be excluded from your policy without your signature. A named-driver exclusion becomes conclusive only when the named insured signs it.
• Your mileage estimate stands. The mileage factor uses your estimate for the next 12 months, and the premium cannot be adjusted later on actual miles unless you were told that before the policy took effect.
• Proof on your phone counts. Vehicle Code section 16028 lets you show evidence of insurance on a mobile device.
• Drivers 55 and older who complete the DMV-approved mature driver course are entitled to an appropriate premium reduction, renewed by retaking the course every three years.

When a policy ends

Cancellation needs a listed reason. Under section 661, a mid-term cancellation is effective only if it is based on nonpayment, a suspended or revoked license or registration of the named insured or a regular driver, claim fraud, a material misrepresentation of key rating information, or a substantial increase in the hazard. A negligent misrepresentation can be cured by giving corrected information within 20 days of the notice and paying any premium difference.

Cancellation needs written notice. Section 662 requires at least 10 days' written notice for nonpayment and 20 days for other reasons, and a nonpayment cancellation takes effect only if the payment has not been made by the end of the 10-day period.

Nonrenewal needs notice too. Under section 663, before a policy expires the insurer must deliver either an offer to renew at least 20 days ahead or a notice of nonrenewal at least 30 days ahead. If it does neither, the policy stays in effect for 30 days from when the offer or notice is finally delivered or mailed.

When you make a claim

The state's Fair Claims Settlement Practices Regulations set the pace. Within 15 calendar days of notice of a claim, the insurer must acknowledge it, give you the forms and instructions you need, and begin any necessary investigation. Within 40 calendar days of receiving proof of claim, it must accept or deny the claim in whole or in part, with limited exceptions. A denial of a claim on your own policy must be in writing, list the factual and legal bases for each reason, and tell you that you may have the matter reviewed by the California Department of Insurance. If the insurer needs more time, it must tell you in writing what it needs, and repeat that notice every 30 days until it decides.

When a decision goes against you

If you are declined, cancelled or charged more because of information an insurer gathered, that is an adverse underwriting decision under the Insurance Information and Privacy Protection Act. Section 791.10 requires the insurer or agent either to give you the specific reasons in writing or to tell you that you can request them. If you ask in writing within 90 business days, it must answer within 21 business days with the reasons, the specific items of information behind them, and the sources that supplied that information, along with a summary of your rights to see and correct what is in your file.

When a company will not engage at all, the Department of Insurance takes consumer complaints, and our guide to filing a complaint walks through how.

The rights at a glance

If you think one of these rights was skipped in your case, or you simply want a second opinion on a policy, you can talk to a licensed broker and get a plain answer.