PLCaliforniamedium
Under 10 CCR § 2632.5, optional rating factors used by a California auto insurer (such as type of vehicle, usage, or vehicle age) must satisfy which weighting rule?
Optional factors must each have less weight than every one of the three mandatory factors per the sequential-analysis rule
BEach optional factor may be weighted heavier than the third mandatory factor if the insurer demonstrates actuarial credibility
COptional factors require approval from the Federal Insurance Office before use
DOptional factors are not allowed in California auto rating
Why this is the answer
Title 10, Section 2632.5 of the California Code of Regulations identifies the optional rating factors a private passenger auto insurer may use, such as type of vehicle, vehicle performance, vehicle use, and vehicle age. Section 2632.8 imposes the sequential-analysis rule: when ordered by impact, the first three factors in the class plan must be the three mandatory factors (driving record, mileage, experience), and each remaining (optional) factor must have a smaller weight (relativity range) than each mandatory factor. Federal approval is irrelevant — insurance rating is a state function.
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