California Warns Auto Insurers: No Stalling Tactics, Discount Skirting

‘Numerous’ consumer complaints of roadblock practices

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

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MacKenzie Korris
MacKenzie KorrisInsurance Copy Editor

MacKenzie Korris is an insurance copy editor with years of experience in print and digital media. He strives to craft actionable, inclusive copy that fosters smart decision-making through reader autonomy. He has a journalism degree from Saint Louis University.

Published January 3, 2024 at 4:00 PM PST | Reading time: 2 minutes

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Some California auto insurers may be intentionally making it difficult to apply for car insurance in the state, or failing to offer required “good-driver” discounts to drivers who should qualify for one, the California Department of Insurance recently announced.

In a December bulletin, Ricardo Lara, California’s insurance commissioner, cited “numerous consumer complaints” as evidence some insurers may be violating the state’s insurance regulations. Insurance companies that use unapproved tactics like waiting periods, complicated questionnaires, or other practices outside their state-approved underwriting guidelines could face enforcement action from the state Department of Insurance (DOI), Lara warned.

“These alleged passive-aggressive tactics by insurance companies to slow down drivers’ access to coverage are unacceptable, dangerous, and will not be tolerated,” Lara said in a press release. “I am taking action today to ensure these insurance companies are acting according to the law and giving drivers the coverage they are paying for at the rate they qualify for. We will continue to monitor the situation and take any and all steps necessary to protect California consumers.”

Consumer complaints

California drivers have complained to the department about insurance company practices that hinder consumers from getting new or renewed coverage, Lara said in a Dec. 21, 2023, bulletin.

Consumers have reported insurers:

  • Imposing waiting periods

  • Requiring completion of long and confusing questionnaires

  • Requiring physically mailed questionnaires despite applicants choosing to receive electronic communications

  • Requiring information on excluded drivers

  • Demanding copies of applicants’ utility bills or vehicle registrations

  • Requiring photos of driver’s licenses or vehicles

“Unreasonable application requirements” may also discourage or delay good drivers from completing an application — thereby giving insurers justification for denying an application or refusing to provide a good-driver policy discount. California law requires insurers to provide the discount to drivers who’ve had a license for at least three consecutive years, have no more than one point on their driving records, and haven’t been at fault in an accident that caused injury or death.

Lara’s bulletin reminds insurers that California law requires them to file for DOI approval for any new or changed forms, programs, policies, coverages, rates, rating factors, underwriting guidelines, rating rules, or other changes.

Consequences for insurers

By issuing a bulletin, Lara has put California insurers on notice. The Department of Insurance uses bulletins to clarify issues of insurance laws, regulations, and enforcement.

“In general, companies found to be violating insurance law and regulations after a bulletin is issued may be subject to enforcement actions such as market conduct reviews, fines, and other penalties,” the department said in a press release announcing Lara’s bulletin.

What’s next

The DOI said it has already informed several insurers they may be in violation of state regulations. Those companies stopped using waiting periods, questionnaires, and other practices, and filed revised underwriting guidelines for the department to review.

Concerned consumers can contact the DOI at 800-927-4357. The department recommends drivers take any action their insurer requires to avoid cancellation or delayed coverage — but keep documentation of all requirements in order to file a complaint.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content

Evelyn Pimplaskar is Insurify’s director of content. With 30-plus years in content creation – including 10 years specializing in personal finance – Evelyn’s done everything from covering volatile local elections as a beat reporter to building fintech content libraries from the ground up.

Before joining Insurify, she was editor-in-chief at Credible, where she launched and developed the lending marketplace’s media partnership’s content initiative and managed the restructuring of the editorial team to enhance content production efficiency. Formerly, as tax editor for Credit Karma, Evelyn built a library of more than 300 educational articles on federal and state taxes, achieving triple-digit year-over-year growth in e-files from organic search.

Her early career included work as a content marketer, vice president and managing officer of a boutique public relations agency, chief copy editor for 14 weekly Forbes publications, reporting for large and mid-sized daily newspapers, and freelancing for the Associated Press.

Evelyn is passionate about creating personal finance content that distills complex topics into relatable, easy-to-understand stories. She believes great content helps empower readers with the information they need to make important personal finance decisions.

MacKenzie Korris
Edited byMacKenzie KorrisInsurance Copy Editor
MacKenzie Korris
MacKenzie KorrisInsurance Copy Editor

MacKenzie Korris is an insurance copy editor with years of experience in print and digital media. He strives to craft actionable, inclusive copy that fosters smart decision-making through reader autonomy. He has a journalism degree from Saint Louis University.