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Under Proposition 103, you are protected against arbitrary cancellations or non-renewal of your auto insurance policy.

Your auto insurance company cannot cancel or refuse to renew your auto insurance policy unless: 1) you didn't pay your premium; 2) you engaged in fraud or misrepresentation concerning the policy; or 3) you have become significantly riskier to insure since you last purchased or renewed your policy.

Original Text of Proposition 103:

California Insurance Code §1861.03 (c) (1) Notwithstanding any other provision of law, a notice of cancellation or nonrenewal of a policy for automobile insurance shall be effective only if it is based on one or more of the following reasons: (A) nonpayment of premium; (B) fraud or material misrepresentation affecting the policy or insured; (C) a substantial increase in the hazard insured against.

No changes to the original text of this provision have been enacted.

Status of Provision:

In effect.

CONSUMER ALERT: Many insurers cancel or refuse to renew policies because of "a substantial increase in the hazard insured against" -- that is, because the insured driver has shown himself or herself to be substantially more risky to insure than he or she was at the time the policy was purchased. For example, an insurer may refuse to renew the policy of a driver who has been convicted of driving under the influence of alcohol.

Unfortunately, under rules established by former Insurance Commissioner Chuck Quackenbush that are still in force, insurers may cancel or refuse to renew policies for less severe infractions as well. For example, an insurer may lawfully cancel the policy of a completely sober driver who violates the "open container" law.

The following is a partial list of circumstances under which your insurer may end your coverage or shunt you to one of its costlier affiliates. In general, for the cancellation or non-renewal to be valid, at least part of the circumstances must have occurred after your insurance contract was last renewed:

  • Any single moving violation that results in two points on your license (such as reckless driving, driving over 100 miles per hour on a highway, driving while under the influence of drugs or alcohol, or driving a car that contains an open container of alcohol).
  • The accumulation of three points on your license over a 36-month period if you no longer qualify for any of the insurer's coverage plans. For the purposes of determining whether they can end your coverage, insurers may consider any accident in which you were at fault and which resulted in over $500 in damages as one point, and may consider any such accident that also resulted in death or injury as two points.

Source Documents:

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Relevant Legal Materials:

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Other:

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Updated: September 2003.