A divided California Court of Appeal upheld a state regulation permitting auto insurers to use marital status as an optional rating factor. The July 16 ruling in Ison v. Lara allows carriers to charge unmarried drivers higher premiums than married drivers with the same profile.
The majority opinion was authored by Justice Rodríguez and joined by Justice Fujisaki. Presiding Justice Alison M. Tucher filed a 30-page dissent.
Farmers Insurance Exchange and Mid-Century Insurance Company intervened alongside Commissioner Lara.
Regulation 2632.5(d)(9) was adopted in 1996 under Proposition 103. The law authorized the commissioner to approve optional auto insurance rating factors with "a substantial relationship to the risk of loss." Plaintiffs did not dispute that marital status meets that standard. The sole question was whether subsequent civil rights legislation invalidated the regulation.
The majority held it did not. The ruling turned on Civil Code section 51(c). That provision states the Act "shall not be construed to confer any right or privilege on a person that is conditioned or limited by law."
The majority read "law" to include validly adopted regulations. Under California Supreme Court precedent, quasi-legislative regulations have "the dignity of statutes."
Because the marital status regulation predated the 2005 Unruh Act amendment adding marital status as a protected class, the majority found the two could be harmonized. The specific regulation was more particular than the Act's general antidiscrimination provisions. Under section 51(c), the Act deferred to the regulation.
The majority also found the 2008 Rosenthal Auto Insurance Nondiscrimination Law amendment did not invalidate the regulation. A statement by the bill's author, printed in the Assembly Journal, clarified the amendment was not intended to alter Proposition 103's optional rating factor framework. The majority relied on that statement.
Tucher agreed with the majority on two foundational points. Proposition 103 requires insurers to comply with future civil rights amendments.
The commissioner may not approve rates that violate the Unruh Act. Her disagreement was on the application of section 51(c).
Tucher argued the regulation's authorizing statutes in the Insurance Code effectively changed when the Unruh Act did in 2005. They incorporate the Act by general reference.
A regulation valid when adopted in 1996 does not remain valid simply because it predates the amendment. "Because insurers must comply with future amendments to the Unruh Act and the Act was amended to list marital status as a protected class in 2005, automobile insurers may no longer discriminate on the basis of marital status," Tucher wrote.
On the RAIN law, Tucher rejected the majority's use of the Assembly Journal statement. She found the plain text of the statute controlling. It prohibits insurers from charging higher rates based on "any characteristic listed" in the Unruh Act.
Marital status is on that list. She would have invalidated the regulation on both grounds.
Consumer Watchdog filed an amicus brief supporting the plaintiffs. The group said the ruling allows carriers to charge higher rates based on personal circumstance rather than driving record. "This case is about whether an insurance company can charge someone more because they are widowed, divorced, or simply unmarried," said litigation director William Pletcher.
The ruling is published and binding on California trial courts. Commissioner Lara's office and Farmers Insurance had not issued public comment at the time of publication. Consumer Watchdog said it is continuing to review the decision.
