Under Proposition 103, before a property and casualty insurer may use a new rate in California, the rate must be:
a.Approved by the FAIR Plan board
b.Approved by the Department of Managed Health Care
c.Filed and used immediately without prior approval
d.Filed with and approved by the Insurance Commissioner (prior approval)
Explanation
Proposition 103 (codified at §1861.05) introduced a prior-approval system: P&C insurers must file rates with the Commissioner and obtain approval before using them. File-and-use is not allowed for most personal lines after Prop 103. DMHC and the FAIR Plan do not approve rates.
Law Reference: Cal. Const. art. XIII, §15; Cal. Ins. Code §1861.05 (Prop. 103)This topic, taught in full in the California Property & Casualty Broker-Agent guide. California Property & Casualty Broker-Agent Study Guide — 2026 Edition — PDF + EPUB, $24.99 · 14-day refund →
Practice all 531 questions free — no signup required.
Own the complete California Property & Casualty Broker-Agent guide — PDF + EPUB, $24.99 →
Related questions on this topic
- An applicant wants to buy a fire policy on a beachfront cottage. The policy will be valid only if the applicant has insurable interest. Insurable interest in property must exist:
- An insurer that decides not to renew a personal lines property policy must mail the named insured written notice of non-renewal at least how many days before expiration?
- When an insurer offers a new or renewal residential property policy, California law requires it to offer earthquake coverage through:
- An insurer routinely tells claimants that policy benefits are lower than they actually are, hoping to settle for less. Under §790.03(h), this conduct is best classified as:
- A friend offers to sell a homeowners policy on the side without ever applying for a license. Under §1631, transacting insurance without a license:
- Which act by a P&C licensee best illustrates a violation of the premium trust statutes (§1733-§1734)?
Last reviewed: · editorial process
PrepPass team · Verified against California Property & Casualty Insurance License Exam · How we review