Short answer: California law says auto insurance prices must be based, in decreasing order of importance, on your driving safety record, the miles you drive each year and your years of driving experience (Insurance Code §1861.02). If you qualify as a good driver, your rate must be at least 20% lower, and not having had insurance before can't by itself be used to set your price.
The mandatory factors, in order
| Rank | Factor | Source |
|---|---|---|
| 1 | Your driving safety record | §1861.02(a)(1) |
| 2 | Miles you drive annually | §1861.02(a)(2) |
| 3 | Years of driving experience | §1861.02(a)(3) |
| 4 | Other factors the Insurance Commissioner adopts by regulation that substantially relate to risk of loss | §1861.02(a)(4); the optional factors are listed in 10 CCR §2632.5 |
The statute says using any rating criterion without approval is "unfair discrimination."
The Good Driver Discount
Anyone who meets the good-driver criteria in §1861.025 can buy a Good Driver Discount policy from the insurer of their choice, and the insurer can't refuse to sell it. The rate must be at least 20% below what that person would otherwise pay for the same coverage (§1861.02(b)).
Prior insurance
Under §1861.02(c), the absence of prior auto insurance, "in and of itself," can't be used to decide eligibility for the Good Driver Discount or to set rates, premiums or insurability.
How to use this
- Report realistic annual mileage. It's the second-most-important factor by law.
- Ask whether you qualify as a good driver if your record recently cleared.
- Compare quotes. Each insurer's approved rating plan weighs the optional factors differently.
Related: how Prop 103 rate review works.
Frequently asked questions
What factors determine car insurance rates in California?
Insurance Code §1861.02 requires, in decreasing order of importance: your driving safety record, annual miles driven and years of driving experience, plus other factors the Commissioner approves by regulation.
How much is the California Good Driver Discount?
At least 20% below the rate you would otherwise be charged for the same coverage, under §1861.02(b).
Can an insurer charge me more because I didn't have insurance before?
Not on that basis alone. §1861.02(c) says the absence of prior coverage, in and of itself, can't be a criterion for rates, premiums or insurability.
Can a California insurer refuse to sell me a Good Driver policy?
No, if you meet the criteria in §1861.025. The statute says an insurer shall not refuse to offer and sell one.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. Not legal, tax or financial advice, and not a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.