(c) An insurer's class plan, and all rates
and premiums determined in accordance therewith, shall utilize the following
rating factors (the "Mandatory Factors") for bodily injury liability, property
damage liability, medical payments, uninsured motorist, collision, and
comprehensive coverages:
(1) "First Mandatory
Factor," as used in subchapter 4.7, is the insured's driving safety record per
California Insurance Code Section
1861.02(a)(1).
This factor means the following for the driver rated on the insured vehicle:
(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;
(B) the principally
at-fault accidents, as determined pursuant to section
2632.13;
(C) all convictions for violations of Vehicle
Code Sections
23140,
23152, or
23153 must be
treated as the highest surchargeable violation; however, other Vehicle Code
convictions may receive equal treatment.
(2) "Second Mandatory Factor" as used in
Subchapter 4.7, is the number of miles the insured drives annually, per
California Insurance Code Section
1861.02(a)(2).
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:
(A) For new
business or vehicles added during the term of the policy:
(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.
(iii) For the purposes of this section, when
one or more vehicles are added during the term of the policy, "applicant" shall
be construed to mean "policyholder" when the context so requires.
(B) For renewal business:
(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.
(ii) If, during the renewal process the
insurer receives none or only some of the information requested in (i) above:
1. The insurer may renew the policy using
either the mileage figure from the expiring policy or using a reasonable
objective mileage estimate based upon the information set forth in (C), (D) and
(E) below, whichever it determines is the most reasonable.
2. The insurer may, if it lacks sufficient
information to determine a reasonable estimate, renew the policy using a
default annual mileage figure which has been filed with and approved by the
Commissioner pursuant to California Insurance Code Section
1861.02.
(iii) Before renewing a policy,
the insurer shall provide the applicant written notice that highlights the
mileage figure for the expiring policy and the mileage figure for the renewal
policy.
(C) An insurer
may require an applicant or policyholder to provide the following information:
1. If the vehicle is used for commute
purposes, the location of the workplace, school, or other destination where the
vehicle will be driven and, if applicable, an estimate of the number of miles
the vehicle will be driven in the course of employment;
2. The number of days per week the vehicle
will be used for commuting;
3. An
estimate of the number of miles to be driven for pleasure or other
purposes;
4. The approximate total
number of miles driven for any time period within, but not to exceed, the
previous 24 months;
5. The reason
for any differences between the estimate for the upcoming 12 months and the
miles driven the previous 12 months; and
6. The current odometer reading of the
vehicle to be insured.
(D) An insurer may request but shall not
require an applicant or policyholder to provide the following information:
1. Service records which document the
odometer reading of the vehicle to be insured.
2. The use of technological devices provided
by the insurer or otherwise made available to the insured that accurately
collect vehicle mileage information.
(E) An insurer may obtain and use smog check
odometer readings from the California Bureau of Automotive Repair, the
California Department of Motor Vehicles, or any other governmental agency that
maintains odometer readings to estimate annual miles driven.
(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.
(i) For any verified mileage
program an insurer offers pursuant to section (c)(2)(F), the Second Mandatory
Factor shall be verified by one or more of the following methods as specified
by the insurer in its class plan:
1. by
odometer readings of the insured vehicle or vehicles, made by an employee of
the insurer, an agent of the insurer; or a third-party vendor retained by the
insurer;
2. by odometer readings
recorded by an automotive repair dealer, as defined by section
9880.1
of the Business and Professions Code, in the ordinary course of the business of
servicing a vehicle, provided to the insurer by the policyholder or by a vendor
retained by the insurer.
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.
4. by odometer readings
reported to the insurer by the insured or by an agent of the insured.
5. by a technological device pursuant to
section (c)(2)(D)2.
a. Except as provided in
subsection b.:
* 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.
b. Nothing in this section shall
prevent a motor club or insurer from using a technological device to collect
information about the location of the insured vehicle as part of an emergency
road service, theft service, map service or travel service.
6. by any other method approved by
the Commissioner.
(ii) An
insurer employing verified actual mileage pursuant to section
2632.5(c)(2)(F)
may retroactively or prospectively adjust premiums based on actual miles driven
provided notice is given to the policyholder prior to the effective date of the
policy.
(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.
(v) An
insurer employing verified actual mileage pursuant to section (c)(2)(F) shall
make available all verification methods it offers to all insureds equally. No
insurer shall offer or use a verification method that is not uniformly offered
to the public.
(vi) An insurer
offering both a mileage estimation program and a verified actual mileage
program shall include both programs in one class plan.
(vii) An insurer employing verified actual
mileage pursuant to section (c)(2)(F) may offer the policyholder an option to
purchase coverage for a specified price per mile ("Price Per Mile Option")
provided the Price Per Mile Option complies with all applicable laws.
(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.
(G) All mileage rating rules that direct the
selection of a mileage rating relativity shall be filed with and approved by
the Commissioner in a class plan filing. This includes use of multiple mileage
rating bands and use of default and/or average mileage rating
relativities.
(H) In no event shall
an insurer require a policyholder to provide information from a prior insurer
to confirm mileage estimated or driven.
(I) Nothing in this section shall be
construed to affect the ability of an insurer to decline to issue, cancel, or
nonrenew a policy in accordance with any other applicable provision of
California law.
(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.
