Approved by voters · November 8, 1988
California Proposition 103 Insurance Rates, Regulation, Commissioner. Initiative Statute.
The voter-written law that makes insurance companies justify their rates before they can charge them, and gives every Californian the power to challenge them.
Five insurance initiatives were on the November 1988 ballot; Prop 103 was the only one voters approved, with 51% of the vote. It was written by Consumer Watchdog founder Harvey Rosenfield and covers auto, homeowners, renters and business insurance, and other forms of liability and property insurance.
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$154 billion
saved by California drivers on auto insurance under Prop 103, as of 2018
Consumer Federation of America, 2018 -
$7.35 billion
saved by Consumer Watchdog’s rate challenges, 2002–2026
See every case -
21¢
what those challenges cost, per $100 they saved consumers
Including all experts and counsel -
$1.2 billion
in refunds insurers paid under the law’s rate rollback
Rollbacks and refunds
How Prop 103 works Insurers have to prove a rate is fair before they can charge it
In 1988, Californians revolted against excessive auto, homeowner and business insurance premiums and passed Proposition 103 to rein in the insurance companies.
The law put the public in the room where rates are set. Today, Consumer Watchdog’s legal team and advocates scrutinize every major rate hike proposed by auto and home insurers in California, and play an integral role in many of the regulatory actions taken by the California Department of Insurance.
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The insurer files
Before changing its rates, an insurance company must ask the California Department of Insurance and justify the request. Rates can’t be excessive in light of the company’s profits and investment income, and the expenses it passes on must be reasonable.
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The public can challenge
Any Californian can challenge the request. When an insurer asks for an increase of 7% or more, the Department must hold a hearing if one is requested.
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Only a justified rate takes effect
The Department must approve rates before they take effect. Consumers who take part can be reimbursed for their legal and expert costs.
“Proposition 103 is written in plain language. There are no loopholes or fine print. Unlike the other propositions, nonlawyers can read it.”
Prop 103 savings Every rate hike we’ve challenged, and what it saved
Using Prop 103, Consumer Watchdog has challenged auto, home and medical malpractice rate hikes in 133 cases since 2002, saving consumers $7.35 billion.
Prop 103 lets the public recover the cost of a challenge. Consumer Watchdog has been awarded $15.73 million for the experts these cases take — actuaries, lawyers, geologists and economists. That’s 21¢ for every $100 consumers saved.
Open the chart to see every case as a square, sized by the money it saved and placed on the date the rate was approved.
Your rights under Prop 103 Sixteen protections, in plain language
Insurance companies too often violate Prop 103, so it pays to know your rights — whether you’re a consumer or a lawyer representing one. Each right links to the actual language of the law, with the legal briefs and court decisions behind it.
What you pay
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Lower rates
Auto, home and business insurance rates can’t be excessive, and the state must approve them before they take effect.
Read the provision →More
Rates set the total an insurer can collect for each kind of coverage it sells. They can’t be excessive in light of the company’s profits and investment income, and the expenses passed through must be reasonable. The Department of Insurance reviews increase (and decrease) requests and approves rates before they take effect — and you have the right to review and challenge them. Rates aren’t premiums: your premium is what you pay under the approved rate, and Prop 103 limits how insurers set and change that too.
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Fair premiums
Your auto premium must be based mainly on your driving record, miles driven and years of experience — not your ZIP code.
Read the provision →More
Prop 103 makes insurers price on factors within your control rather than where you live. Insurers kept rating mainly by ZIP code — “territorial rating” — after a Court of Appeal refused to enforce the law, until a later insurance commissioner wrote regulations that properly enforce it.
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20% good driver discount
A clean driving record earns you a 20% discount, even if you didn’t have insurance before.
Read the provision →More
You qualify with a clean driving record, and the insurance company has to give you its best deal.
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Group policies
Consumers can band together to negotiate low-cost group policies for their cars, homes or businesses.
Read the provision →More
Big policyholders such as large corporations have always been able to negotiate discounted policies. Prop 103 lets individual consumers do the same by banding together.
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Discounted commissions
You can negotiate with your broker to cut their commission — something the old law prohibited.
Read the provision →More
Commissions run anywhere from 5% to 50% of a policy, depending on the kind of insurance. Large customers could always negotiate discounts, but agents were barred by law — a law they backed — from cutting commissions for individual consumers. Prop 103 repealed it.
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Rollbacks and refunds
Prop 103 ordered a rate rollback. Insurers fought it in court, lost, and paid $1.2 billion in refunds.
Read the provision →More
When it passed in 1988, Prop 103 required a one-year rollback of rates and then an additional 20% reduction. Most insurers refused to comply at first; after their legal challenges failed, they agreed to pay a total of $1.2 billion.
Your coverage
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Your choice of insurer
A qualified good driver can buy a Good Driver policy from any insurer doing business in California, wherever they live.
Read the provision →More
Insurers don’t have offices in every neighborhood, and some deliberately avoid selling in certain ones — “redlining.” Under Prop 103 it doesn’t matter where you live: call any insurer doing business in California, or an agent representing it, and it must sell you a Good Driver policy at a 20% discount.
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No surcharge when it wasn’t your fault
Your insurer can’t raise your rates over an accident you didn’t cause.
Read the provision →More
Many drivers are afraid to file a claim even when an accident wasn’t their fault. Prop 103 protects you.
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No arbitrary cancellations
You’re protected against arbitrary cancellation or non-renewal of your auto policy.
Read the provision →More
Your auto insurer can cancel or refuse to renew for only three reasons: you didn’t pay your premium; you committed fraud or misrepresentation concerning the policy; or “a substantial increase in the hazard insured against.”
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No penalty for a gap in coverage
Insurers can’t charge you more because you weren’t insured before or had a lapse in coverage.
Read the provision →
Your power to fight back
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Challenge rates
Anyone can challenge an insurer’s rate request, or its current rates and practices, before the Department of Insurance.
Read the provision →More
Challenges are filed with the California Department of Insurance. When an insurer asks for an increase of 7% or more, the Department must hold a hearing on your request.
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Intervene
You can join any insurance matter before the Department of Insurance or the courts.
Read the provision → -
Sue for violations
You can take an insurer to court for breaking Prop 103 — over your own rights or the public’s.
Read the provision → -
Legal costs reimbursed
If you take part in a rate proceeding or lawsuit, you may be reimbursed for your legal costs.
Read the provision →More
Prop 103 was written to encourage the public to take part in enforcing the insurance laws. Under certain circumstances, your attorneys’ fees and expenses can be paid by the insurance companies, the Department of Insurance or the courts.
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Full disclosure
Everything insurers file with the Department under Prop 103 must be made public.
Read the provision → -
Protected from the Legislature
Lawmakers can’t rewrite Prop 103 in ways that undermine its protections.
Read the provision →More
Prop 103 was necessary because the Legislature was too beholden to the insurance industry to pass needed reforms. To protect itself from the insurance lobby, the law forbids hostile amendments. That hasn’t stopped the Legislature from trying.
Prop 103 history The law voters wrote, and the fight to keep it
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1988
Voters pass Prop 103
Harvey Rosenfield and Voter Revolt put the measure on the ballot. The insurance industry spent $80 million trying to defeat it and lost.
The 1988 battle Ballot pamphlet (PDF)
The 1988 voter guide’s argument for Prop 103, signed by Ralph Nader and Harvey Rosenfield. -
2006
Insurers lose in court over ZIP codes
Insurers sued to block rules requiring auto premiums to be based primarily on driving record rather than ZIP code. They failed.
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2007
Fifteen years of results
Consumer Watchdog’s report found California premiums fell under Prop 103 while rates rose 47% nationwide.
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2010
Voters defeat Proposition 17
Mercury Insurance’s initiative would have repealed the ban on penalizing drivers who went without auto insurance at some point in the prior five years. Campaign for Consumer Rights, Consumer Watchdog’s advocacy affiliate, defeated it.
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2018
$154 billion saved
The Consumer Federation of America found Prop 103 had saved California drivers $154 billion and lowered auto liability premiums 5.7% since 1989, while they rose 58.5% in the rest of the country. California is the only state where auto premiums went down.
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2026
Rate-challenge savings reach $7.35 billion
Every dollar comes from a rate hike Consumer Watchdog challenged before the Department of Insurance, at a cost of 21¢ per $100 saved.
The fight over Prop 103 Insurers have never stopped trying to undo it
Insurance companies spent $80 million trying to defeat Prop 103 in 1988. Since then they have spent millions more on ballot initiatives, lobbying and political contributions aimed at undermining the voter-approved reforms.
At the ballot box
Insurers have bankrolled initiatives to roll back Prop 103, like Mercury’s Proposition 17. Voters rejected it in 2010.
In the Legislature
Instead of reforms that expand consumers’ rights, insurers and their allies in other industries lobby for “tort reform” that restricts the right to go to court.
In the courts
Consumer Watchdog’s legal team takes insurers to court to enforce Prop 103, and defends the law when the industry sues to weaken it.
No-fault schemes
Insurers keep pushing to replace the system where the driver who causes a crash pays with no-fault insurance, which has failed around the country.
Latest
Prop 103 in the news
- NBC 7 San Diego San Diego case alleging USAA overcharges heads to CA Supreme Court
- Consumer Watchdog California Supreme Court to Decide Whether Insurers Can Hide Illegal Overcharges Behind Approved Rates
- Consumer Watchdog Lawsuit By Former Chief Administrative Law Judge Alleges Illegal Interference in Decisions & Ethics Violations by Top Insurance Department Lawyers; Department Wants to Quash Testimony in Consumer Group Case
- Daily Journal Former chief insurance judge sues Lara over alleged retaliation
- California Post California judge claims state fired her for blocking insurance rate increases
- San Francisco Chronicle California Supreme Court case could impact insurance rates for millions of residents
Prop 103 documents The law, the history and the research
The law
History
- The 1988 battle for Prop 103 The $80 million David-vs.-Goliath fight to reform insurance at the ballot box.
- Auto insurance crisis and reform Harvey Rosenfield in the University of Memphis Law Review on the purpose and impact of each reform.
- Prop 103: a visual history The story of the law and its savings, as you scroll.
Research
- Savings from rate challenges PDF Every case Consumer Watchdog has won since 2002, on one chart. Redrawn whenever a case is added.
- Auto Insurance Regulation: What Works PDF External J. Robert Hunter’s study for the Consumer Federation of America — the 2018 finding of $154 billion saved. News release
- 15 years of Prop 103 PDF Consumer Watchdog’s 2007 report on the law’s first fifteen years of data. News release
Prop 103 only protects you if someone enforces it
Consumer Watchdog has fought for this law since 1988. Help us keep insurance companies honest.
Prop 103 FAQ Questions people ask about Prop 103
What is California Proposition 103?
Proposition 103 is the insurance reform law California voters approved on November 8, 1988. It requires insurance companies to get their rates approved by the California Department of Insurance before they can charge them, lets any Californian challenge a rate, ordered a rollback of rates, created the 20% good driver discount and made the Insurance Commissioner an elected office.
Who wrote Prop 103?
Consumer Watchdog founder Harvey Rosenfield wrote it, and his group Voter Revolt to Cut Insurance Rates put it on the ballot. The insurance industry spent $80 million trying to defeat it. It passed with 51% of the vote — the only one of five insurance initiatives on that ballot to pass.
What kinds of insurance does Prop 103 cover?
Auto, homeowners, renters and business insurance, as well as other forms of liability and property insurance.
Can insurance companies raise rates in California without approval?
No. Under Prop 103’s “prior approval” system, an insurer has to file a rate change with the California Department of Insurance and justify it, and the Department must approve it before it takes effect. Rates can’t be excessive in light of the insurer’s profits and investment income.
How do I challenge an insurance rate increase in California?
Any member of the public can challenge an insurer’s rate request, or its current rates and practices, with the California Department of Insurance. When an insurer asks for an increase of 7% or more, the Department must hold a hearing if one is requested, and people who take part may be reimbursed for their legal and expert costs. Consumer Watchdog challenges major auto and home rate requests — tell us about a problem.
What is the Prop 103 good driver discount?
Drivers with a clean record are entitled to a 20% discount, even if they didn’t have insurance before, and any insurer doing business in California must sell a qualified good driver a Good Driver policy.
Can my car insurance be based on my ZIP code?
Prop 103 requires auto premiums to be based mainly on your driving safety record, the miles you drive and your years of driving experience — factors within your control — rather than where you live. Insurers sued in 2006 to block the rules that enforce this, and lost.
Can my insurer raise my rates after an accident that wasn’t my fault?
No. Prop 103 bars insurers from surcharging you for an accident you didn’t cause.
How much money has Prop 103 saved Californians?
The Consumer Federation of America found in 2018 that Prop 103 had saved California drivers $154 billion on auto insurance. Separately, Consumer Watchdog’s challenges to rate increases under Prop 103 have saved consumers $7.35 billion since 2002.
Is the California Insurance Commissioner elected?
Yes. Prop 103 made the Insurance Commissioner an elected office, so the official who regulates insurance companies answers to voters.
Can the Legislature change Prop 103?
Not in ways that undermine it. Prop 103 forbids hostile amendments by the Legislature — a protection written in because lawmakers had refused to pass insurance reform themselves.
Does Prop 103 apply outside California?
No. Prop 103 is a California law; it governs insurance sold in California.