Personal Auto PolicyQuestion 6 of 474
Proposition 103 makes California a 'prior approval' state for auto insurance rates. What does this mean?
a.Rates are set entirely by the Insurance Commissioner with no insurer input
b.Insurers may implement a rate and the CDI may disapprove it later
c.Insurers may use any rate as long as they file it within 30 days
d.Rate changes must be filed with and approved by the CDI before they take effect
Explanation
Insurance Code §1861.05, the rate provision of Proposition 103, makes California a prior approval state. Any rate change must be filed with the California Department of Insurance and receive approval BEFORE it can be implemented. This is distinct from 'file and use' or 'use and file' states.
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 →
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