(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.
