California Codes

Cal. Insurance Code § 1861.02 (2026)

✓ current as of May 2026

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(a)Rates and premiums for an automobile insurance policy, as described in subdivision (a) of Section 660, shall be determined by application of the following factors in decreasing order of importance:

(1)The insured’s driving safety record.

(2)The number of miles he or she drives annually.

(3)The number of years of driving experience the insured has had.

(4)Those other factors that the commissioner may adopt by regulation and that have a substantial relationship to the risk of loss. The regulations shall set forth the respective weight to be given each factor in determining automobile rates and premiums. Notwithstanding any other provision of law, the use of any criterion without approval shall constitute unfair discrimination.

(b)(1)Every person who meets the criteria of Section 1861.025 shall be qualified to purchase a Good Driver Discount policy from the insurer of his or her choice. An insurer shall not refuse to offer and sell a Good Driver Discount policy to any person who meets the standards of this subdivision.

(2)The rate charged for a Good Driver Discount policy shall comply with subdivision (a) and shall be at least 20 percent below the rate the insured would otherwise have been charged for the same coverage. Rates for Good Driver Discount policies shall be approved pursuant to this article.

(3)(A)This subdivision shall not prevent a reciprocal insurer, organized prior to November 8, 1988, by a motor club holding a certificate of authority under Chapter 2 (commencing with Section 12160) of Part 5 of Division 2, and that requires membership in the motor club as a condition precedent to applying for insurance from requiring membership in the motor club as a condition precedent to obtaining insurance described in this subdivision.

(B)This subdivision shall not prevent an insurer that requires membership in a specified voluntary, nonprofit organization, which was in existence prior to November 8, 1988, as a condition precedent to applying for insurance issued to or through those membership groups, including franchise groups, from requiring that membership as a condition to applying for the coverage offered to members of the group, provided that it or an affiliate also offers and sells coverage to those who are not members of those membership groups.

(C)However, all of the following conditions shall be applicable to the insurance authorized by subparagraphs (A) and (B):

(i)Membership, if conditioned, is conditioned only on timely payment of membership dues and other bona fide criteria not based upon driving record or insurance, provided that membership in a motor club may not be based on residence in any area within the state.

(ii)Membership dues are paid solely for and in consideration of the membership and membership benefits and bear a reasonable relationship to the benefits provided. The amount of the dues shall not depend on whether the member purchases insurance offered by the membership organization. None of those membership dues or any portion thereof shall be transferred by the membership organization to the insurer, or any affiliate of the insurer, attorney-in-fact, subsidiary, or holding company thereof, provided that this provision shall not prevent any bona fide transaction between the membership organization and those entities.

(iii)Membership provides bona fide services or benefits in addition to the right to apply for insurance. Those services shall be reasonably available to all members within each class of membership.

Any insurer that violates clause (i), (ii), or (iii) shall be subject to the penalties set forth in Section 1861.14.

(c)The absence of prior automobile insurance coverage, in and of itself, shall not be a criterion for determining eligibility for a Good Driver Discount policy, or generally for automobile rates, premiums, or insurability.

(d)An insurer may refuse to sell a Good Driver Discount policy insuring a motorcycle unless all named insureds have been licensed to drive a motorcycle for the previous three years.

(e)This section shall become operative on November 8, 1989. The commissioner shall adopt regulations implementing this section and insurers may submit applications pursuant to this article which comply with those regulations prior to that date, provided that no such application shall be approved prior to that date.

Notes of Decisions

Cited in 11 cases (2 in the last 5 years), 1998–2021 · leading case: Quelimane Co. v. Stewart Title Guar. Co., 960 P.2d 513 (Cal. 1998).

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Quelimane Co. v. Stewart Title Guar. Co., 960 P.2d 513 (Cal. 1998). · cites it 2× “The Attorney General sued to require auto insurers to offer the "Good Driver Discount" adopted as part of Proposition 103 (Ins.Code, §§ 1861.02, 1861.05; enacted by the voters in Nov.”

Spanish Speaking Citizens' Found., Inc. v. Low, 103 Cal. Rptr. 2d 75 (Cal. Ct. App. 2001). · cites it 3× “” (Ins. Code, § 1861.02, subd. (a).) While these provisions may appear straightforward enough, devising regulations to implement them has been very difficult.”

MacKay v. Superior Court, 188 Cal. App. 4th 1427 (Cal. Ct. App. 2010). · cites it 2× “” (Ins. Code, § 1861.02, subd. (a)(1).) 21st Century had four ways of determining an applicant’s driving safety record, although three of the four methods depended on the applicant then having insurance, 2 and not all applicants who were uninsured were eligible to use the fourth…”

Dominguez v. Fin. Indem. Co., 183 Cal. App. 4th 388 (Cal. Ct. App. 2010). · cites it 2× “[10] "No policy or bond shall be effective under Section 16054 unless issued by an insurance company or surety company admitted to do business in this state by the Insurance Commissioner, except as provided in subdivision (b) of this section, nor unless the policy or bond is…”

State Farm Mut. Auto. Ins. v. Garamendi, 88 P.3d 71 (Cal. 2004). “, Insurance Code sections 1861.02, 1861.03 and 1861.”

Donabedian v. Mercury Ins., 11 Cal. Rptr. 3d 45 (Cal. Ct. App. 2004). “” (Ins. Code, § 1861.02, subd. (a)(l)-(4); all further statutory references are to the Insurance Code unless otherwise indicated.”

Farmers Ins. Exch. v. Superior Court, 40 Cal. Rptr. 3d 653 (Cal. Ct. App. 2006). “Statutes predating Proposition 103 created a comprehensive scheme for administrative enforcement of insurance rate regulations.”

King v. Nat'l Gen. Ins., 129 F. Supp. 3d 925 (N.D. Cal. 2015). “Plaintiffs also allege that Defendants acted fraudulently “by failing to disclose material facts concerning their automobile insurance rates, including that their rates violated Cal.”

State Farm Mut. Auto. Ins. Co. v. Low, 112 Cal. Rptr. 2d 574 (Cal. Ct. App. 2002). “(Ins. Code, § 1861.02.) It also prohibits certain unfair insurance practices and makes the insurance industry subject to the Unruh Civil Rights Act (Civil Code, §§ 51-53) and the state's antitrust and unfair business practices laws (Bus.”

Edd King v. Nat'l Gen. Ins. Co. (N.D. Cal. 2021). “Cal. Ins. Code §§ 1861.02 (b)(1), 1861.025 (listing the 8 criteria to qualify for a GDD policy).”

Coleman v. United Servs. Auto. Ass'n (S.D. Cal. 2021). “CAL. INS. CODE § 1861.02. 14 Section 1861.”

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