California Insurance Code & EthicsQuestion 42 of 474
Under Proposition 103, codified at §1861.05, before a personal auto or homeowners insurer can use a new rate it must:
a.Submit the rate to the Department of Managed Health Care
b.File the rate for informational purposes only
c.Obtain prior approval from the Insurance Commissioner
d.Receive automatic approval if no action within 60 days
Explanation
Section 1861.05, enacted by Proposition 103 in 1988, makes California a prior-approval state for property and casualty rates, including personal auto and homeowners. The rate must be neither excessive, inadequate, nor unfairly discriminatory, and the Commissioner must approve it before use.
Law Reference: Cal. Ins. Code §1861.05 (Prop 103)This topic, taught in full in the Personal Lines Insurance Producer guide. Personal Lines Insurance Producer — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
Practice all 474 questions free — no signup required.
Own the complete Personal Lines Insurance Producer guide — PDF + EPUB, $19.99 →
Related questions on this topic
- An insurer intends to non-renew a personal auto policy at the end of the term. Under §663, how much advance written notice must be sent to the named insured?
- Following a Governor-declared wildfire emergency, §675.1 prohibits an insurer from canceling or non-renewing residential property policies in affected ZIP codes for what period?
- Under §10086, an insurer that writes residential property coverage in California must do which of the following with respect to earthquake insurance?
- An insurer unreasonably delays paying an undisputed amount on a homeowners claim by several months. Under Civil Code §3287, the insured may be entitled to:
- Under §11580, an injured third party who has obtained a judgment against an insured tortfeasor in an auto accident may bring a direct action against the insurer when:
- After a covered auto collision, an insurer wants to suggest a specific auto body repair shop to the insured. Under the Auto Body Bill of Rights (§758.5), the insurer must:
Last reviewed: · editorial process
PrepPass team · Verified against California Personal Lines Insurance License Exam · How we review