<PAGE>
 
                                                                     EXHIBIT 3.1

                           ARTICLES OF INCORPORATION
                           -------------------------
                                       OF
                                       --
                        CALIFORNIA GENERAL UNDERWRITERS
                        -------------------------------


          We, the undersigned, residents of the State of California, have this
day voluntarily associated ourselves together for the purpose of forming a
corporation under the laws of the State of California, and we do hereby certify:

          ONE:      The name of this corporation is
          ---                                      
     CALIFORNIA GENERAL UNDERWRITERS.

          TWO:      The specific business in which the corporation is primarily
          ---                                                                  
to engage is the management of the underwriting department of a casualty
insurance company, the issuing of insurance policies, and acting as consultants
and advisers of insurance companies, both casualty and others.

          THREE:    The purposes for which this corporation is formed are:
          -----                                                           

          (a) The primary business in which the corporation initially intends to
engage is the consulting with and advising insurance companies, both casualty
and others.

          (b) To buy, sell, own, hold, exchange, mortgage, and otherwise deal in
and with any and all kinds of real, personal or mixed property; to incur any
indebtedness, and to execute any and all evidences of such indebtedness; to sign
and deliver any and all kinds of notes, stocks, bonds, trust indentures,
contracts and documents; to lend or borrow money, with or without security; to
act as real estate broker; to act as agent for the making or procuring of loans,
and to act as broker in connection with the purchase, sale or exchange of any
and all kinds of real and personal property; to buy, purchase or otherwise
acquire any patent or patents, process of processes, or trade-marks or copy-
rights, to sell, lease or encumber or otherwise deal in any patent or patents,
or any interest or interests in any patent or patents, process or processes, of
trade-marks or copyrights; to merge or consolidate with any corporation in such
manner as may be permitted by law.

                                       1
<PAGE>
 
          (c) To manufacture, import, export, buy and sell and deal generally in
any and all kinds of goods, wares and merchandise of any and all kinds and
descriptions, and to carry on all other businesses incidental thereto; and to do
anything which any person may do, establish and carry on that may be lawful
under the laws of the State of California; to exercise all of the powers
conferred by the laws of the State of California upon corporations formed under
the laws pursuant to and under which this corporation is formed, as such laws
are now in effect or may at any time hereafter be amended; and to enter into
partnerships and joint ventures with natural persons or other corporations.

          (d) To erect, construct, maintain, improve, rebuild, enlarge, alter,
manage and control, directly or through ownership of stock in any corporation,
any and all kinds of buildings, houses, stores, offices, shops, warehouses,
factories, mills, machinery and plants, and any and all other structures and
erections which may, in the judgment of the Board of Directors, at any time be
necessary, useful or advantageous for the purposes of the corporation, and which
can lawfully be done under the laws of the State of California.

          (e) To carry on the business of warehousing in all of its branches; to
receive on consignment or otherwise, to store, sell and distribute goods on
commission or other basis; to export, import, and otherwise deal in goods, wares
and merchandise of all classes and descriptions; to issue warehouse receipts,
certificates and circulars, negotiable or otherwise, to persons warehousing
goods, wares or merchandise with said corporation; to make advances on loans by
way of mortgage, pledge or deposit on warehouse receipts, upon the security of
goods, wares or merchandise stored with said corporation, or otherwise.

          (f) To acquire, by purchase or otherwise, the good will, business,
property rights, franchises and assets of every kind, with or without
undertaking, either wholly or in part, the liabilities of any person, firm
association or corporation; and to acquire any business as a going concern, or
otherwise, (1) by purchase of the assets thereof, wholly or in party; (2) by
acquisition of the shares, or any part thereof; or (3) in any other manner; and
to pay for the same in cash or in the shares or bonds or other evidence of
indebtedness of this corporation, or otherwise; to hold, maintain and operate,
or in any other manner dispose of, the whole or any part of the good will,
business rights and property so acquired, and to conduct in any lawful manner

                                       2
<PAGE>
 
the whole or any part of any business so acquired; and to exercise all of the
powers necessary or convenient in and about the management of such business.

          (g) To establish branch stores, offices, wholesale houses and
factories for the conduct of the business of said corporation.

          The foregoing statement of purposes, objects and powers shall be
construed as a statement of both powers and purposes; and the purposes, objects
and powers stated in each clause shall, except where otherwise expressed, be in
nowise limited or restricted by reference to or inference from the terms or
provisions of any other paragraph or clause but shall be regarded as independent
powers, objects and powers.

          The foregoing shall be construed as objects and powers, and the
enumeration thereof shall not be held to limit or restrict in any manner the
general powers now or thereafter conferred on this corporation by the laws of
the State of California.

          FOUR:      That the principal office for the transaction of the
          ----                                                           
business of the corporation will be in the County of Los Angeles, State of
California.

          FIVE:      That the term of existence of this corporation shall be the
          ----                                                                  
maximum term allowed by the laws of the State of California.

          SIX:      That the number of directors of this corporation shall be
          ---                                                                
three (3); and the names and addresses of the persons so appointed to act as the
first directors are:

                         GEORGE JOSEPH
                         1227 South LaBrea Avenue
                         Los Angeles 19, California

                         GEORGE McKAY
                         705 Plymouth Road
                         San Marino, California

                         RICHARD H. OSHMAN
                         3540 Wilshire Boulevard
                         Los Angeles 5, California

          SEVEN:    That the total number of shares which the corporation shall
          -----                                                                
have the authority to issue is two thousand (2,000) shares of the par value of
One Hundred ($100.00) Dollars each, and of the aggregate par value of Two
Hundred Thousand ($200,000) Dollars.

                                       3
<PAGE>
 
          EIGHT:    The stock of this corporation shall be non-assessable.
          -----                                                           

          NINTH:    After the initial application for a permit to issue stock
          -----                                                              
has been made and approved by the California Corporation Commissioner and the
said stock is sold and/or issued pursuant thereto, no additional applications
may be made for the issuance of new common stock unless and until the Secretary
of the corporation has obtained in writing the consent of the holders of at
least 75% of the common stock outstanding at that time.

          IN WITNESS WHEREOF, we have hereunto set our hands this 27th day of
December, 1960.

                                    /s/ George Joseph
                                    ----------------------
                                        George Joseph


                                    /s/ George McKay
                                    ----------------------
                                        George McKay


                                    /s/ Richard H. Oshman
                                    ----------------------
                                        Richard H. Oshman

                                       4
<PAGE>
 
STATE OF CALIFORNIA     )
                        )  ss.
COUNTY OF LOS ANGELES   )

          On this 27th day of December, 1960, before me, a Notary Public in and
for said County and State, personally appeared GEORGE JOSEPH, known to me to be
the person whose name is subscribed to the within instrument, and acknowledged
that he executed the same.

          WITNESS my hand and official seal.

                                    /s/ J.M. Barker
                                    -----------------------------
                                    Notary Public in and for said
                                       County and State
                                    J. M. Barker

STATE OF CALIFORNIA    )
                       )  ss.
COUNTY OF LOS ANGELES  )

          On this 27th day of December, 1960, before me, a Notary Public in and
for said County and State, personally appeared GEORGE McKAY, known to me to be
the person whose name is subscribed to the within instrument, and acknowledged
that he executed the same.

          WITNESS my hand and official seal.

                                    /s/  J.M. Barker
                                    -----------------------------
                                    Notary Public in and for said
                                       County and State
                                    J. M. Barker

                                       5
<PAGE>
 
STATE OF CALIFORNIA     )
                        )  ss.
COUNTY OF LOS ANGELES   )

          On this 27th day of December, 1960, before me, a Notary Public in and
for said County and State, personally appeared RICHARD A. OSHMAN, known to me to
be the person whose name is subscribed to the within instrument, and
acknowledged that he executed the same.

          WITNESS my hand and official seal.

                                    /s/  Manuel Seligman
                                    -----------------------------
                                    Notary Public in and for said
                                       County and State
                                    Manuel Seligman

                                       6
<PAGE>
 
                            CERTIFICATE OF AMENDMENT
                                       OF
                           ARTICLES OF INCORPORATION
                                       OF
                        CALIFORNIA GENERAL UNDERWRITERS


          GEORGE JOSEPH and RICHARD H. OSHMAN certify:

     1.  That they are the President and Secretary, respectively, of CALIFORNIA
GENERAL UNDERWRITERS, a California Corporation.

     2.  That at a meeting of the Board of Directors of said Corporation, duly
held at Los Angeles, California, on the 18th of November, 1968, the following
Resolution was adopted:

          "RESOLVED, that Article ONE of the Articles of Incorporation of this
     corporation be amended to read as follows:

                    'ONE:  The name of this corporation is

                         CALIFORNIA MANAGEMENT, INC.'"
                         ---------------------------- 

     3.  That the Shareholder has adopted said amendment by written consent.
That the wording of the amended Article, as set forth in the Shareholder's
written consent, is the same as that set forth in the Directors' Resolution in
Paragraph 2 above.

     4.  That the number of shares represented by written consent is fifty.
That the total number of shares entitled to vote on or consent to the amendment
is fifty.

                                    /s/ George Joseph
                                    ----------------------------
                                    George Joseph, President

                                    /s/  Richard H. Oshman
                                    ----------------------------
                                    Richard H. Oshman, Secretary

                                       1
<PAGE>
 
     Each of the undersigned declares under penalty of perjury that the matters
set forth in the foregoing Certificate are true and correct.

     Executed at Los Angeles, California, on November 21, 1968.

                                    /s/  George Joseph
                                    ----------------------------
                                    George Joseph


                                    /s/  Richard H. Oshman
                                    ----------------------------
                                    Richard H. Oshman

                                       2
<PAGE>
 
                            CERTIFICATE OF AMENDMENT
                                       OF
                           ARTICLES OF INCORPORATION
                                       OF
                          CALIFORNIA MANAGEMENT, INC.
                          ---------------------------


          GEORGE JOSEPH and RICHARD H. OSHMAN certify:

          1.  That they are the President and Secretary, respectively, of
CALIFORNIA MANAGEMENT, INC., a California Corporation.

          2.  That at a meeting of the Board of Directors of said Corporation,
duly held at Los Angeles, California, on June 2, 1969, the following Resolution
was adopted:

               "RESOLVED, that Article ONE of the Articles of Incorporation of
               this corporation be amended to read as follows:

                    'ONE:  The name of this corporation is

                           CALIFORNIA GENERAL MANAGEMENT, INC.'"
                           ------------------------------------ 

          3.  That the Shareholder has adopted said amendment by written
consent.  That the wording of the amended Article, as set forth in the
Shareholder's written consent, is the same as that set forth in the Directors'
Resolution in Paragraph 2 above.

          4.  That the number of shares represented by written consent is fifty.
That the total number of shares entitled to vote on or consent to the amendment
is fifty.
                                    /s/  George Joseph
                                    ----------------------------
                                    George Joseph, President

                                    /s/  Richard H. Oshman
                                    ----------------------------
                                    Richard H. Oshman, Secretary

     Each of the undersigned declares under penalty of perjury that the matters
set forth in the foregoing Certificate are true and correct.

                                       1
<PAGE>
 
     Executed at Los Angeles, California, on June 2, 1969.

                                    /s/  George Joseph
                                    ----------------------------
                                    George Joseph

                                    /s/  Richard H. Oshman
                                    ----------------------------
                                    Richard H. Oshman

                                       2
<PAGE>
 
                              AGREEMENT OF MERGER
                                    BETWEEN
                      CALIFORNIA GENERAL MANAGEMENT, INC.
                                      AND
                                GJA MERGER CORP.

          This Agreement of Merger is entered into between CALIFORNIA GENERAL
MANAGEMENT, INC., a California corporation (herein "Surviving Corporation") and
GJA MERGER CORP., a California corporation (herein "Merging Corporation").

          1.   Merging Corporation shall be merged into Surviving Corporation.

          2.   Each outstanding share of Merging Corporation shall be converted
               to one share of Surviving Corporation.

          3.   The outstanding shares of Surviving Corporation shall remain
               outstanding and are not affected by the merger.

          4.   Merging Corporation shall from time to time, as and when
               requested by Surviving Corporation, execute and deliver all such
               documents and instruments and take all such action necessary or
               desirable to evidence or carry out this merger.

          5.   The effect of the merger and the effective date of the merger are
               as prescribed by law.

IN WITNESS WHEREOF the parties have executed this Agreement.

                              CALIFORNIA GENERAL MANAGEMENT, INC.

                              By /s/  George Joseph
                                 ----------------------------
                                 President

                              By /s/  Stepan Stepanian
                                 ----------------------------
                                 Secretary

                                       1
<PAGE>
 
                              GJA MERGER CORP.

                              By  /s/  George Joseph
                                --------------------------
                                  President

                              By  /s/  Stepan Stepanian
                                ---------------------------
                                  Secretary

                                       2
<PAGE>
 
                            CERTIFICATE OF APPROVAL
                                       OF
                              AGREEMENT OF MERGER

GEORGE JOSEPH AND STEPAN STEPANIAN certify that:

          1.  They are the president and the secretary, respectively, of
              CALIFORNIA GENERAL MANAGEMENT, INC., a California corporation.

          2.  The Agreement of Merger in the form attached was duly approved by
              the board of directors and shareholders of the corporation.

          3.  The shareholder approval was by the holders of 100% of the
              outstanding shares of the corporation.

          4.  There is only one class of shares and the number of shares
              outstanding is 50.

                              /s/  George Joseph
                              -----------------------------
                              GEORGE JOSEPH, President

                              /s/  Stepan Stepanian
                              -----------------------------
                              STEPAN STEPANIAN, Secretary

     The undersigned declare under penalty of perjury that the matters set forth
in the foregoing certificate are true of their own knowledge. Executed at Los
Angeles, California on October 30, 1978.

                              /s/  George Joseph
                              -----------------------------
                              GEORGE JOSEPH

                              /s/  Stepan Stepanian
                              -----------------------------
                              STEPAN STEPANIAN

                                       1
<PAGE>
 
                            CERTIFICATE OF APPROVAL
                                       OF
                              AGREEMENT OF MERGER

GEORGE JOSEPH AND STEPAN STEPANIAN certify that:

          1.   They are the president and the secretary respectively, of GJA
               MERGER CORP., a California corporation.

          2.   The Agreement of Merger in the form attached was duly approved by
               the board of directors and shareholders of the corporation.

          3.   The shareholder approval was by the holders of 100% of the
               outstanding shares of the corporation.

          4.   There is only one class of shares and the number of shares
               outstanding is 9.


                              /s/  George Joseph
                              -----------------------------
                              GEORGE JOSEPH, President

                              /s/  Stepan Stepanian
                              -----------------------------
                              STEPAN STEPANIAN, Secretary

     The undersigned declare under penalty of perjury that the matters set forth
in the foregoing certificate are true of their own knowledge. Executed at Los
Angeles, California on October 30, 1978.


                              /s/  George Joseph
                              -----------------------------
                              GEORGE JOSEPH

                              /s/  Stepan Stepanian
                              -----------------------------
                              STEPAN STEPANIAN

                                       1
<PAGE>
 
                            CERTIFICATE OF OWNERSHIP


GEORGE JOSEPH AND STEPAN STEPANIAN certify that:

          1.  They are the President and Secretary, respectively, of CALIFORNIA
GENERAL MANAGEMENT, INC., a California corporation.

          2.  This corporation owns all the outstanding shares of MERCURY
GENERAL CORPORATION, a California corporation.

          3.  The Board of Directors of this corporation duly adopted the
following resolutions:

              RESOLVED, that Mercury General Corporation, be merged into this
          corporation, and that all of the estate, property rights, privileges,
          powers and franchises of Mercury General Corporation be vested in and
          held and enjoyed by this corporation as fully and entirely and without
          change or diminution as the same were before held and enjoyed by
          Mercury General Corporation in its name.

              RESOLVED, that this corporation assume all of the obligations of
          Mercury General Corporation pursuant to Section 1110 of the California
          Corporation Code.

              RESOLVED, that this corporation shall cause to be executed and
          filed and/or recorded the documents prescribed by the laws of the
          State of California and by the laws of any other appropriate
          jurisdiction and will cause to be performed all necessary acts within
          the State of California and within any other appropriate jurisdiction.

              RESOLVED, that this corporation's name shall continue to be
          California General Management, Inc.

              RESOLVED, that the effective date of the Certificate of Ownership
          setting forth a copy of these resolutions, and the date upon which the
          merger therein provided for shall become effective, shall be the
          Filing Date.

                              /s/  George Joseph
                              -----------------------------
                              George Joseph, President

                              /s/  Stepan Stepanian
                              -----------------------------
                              Stepan Stepanian, Secretary

                                       1
<PAGE>
 
          The undersigned declare under penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge.  Executed at
Los Angeles, California on December 18, 1980.

                              /s/  George Joseph
                              -----------------------------
                              George Joseph


                              /s/  Stepan Stepanian
                              -----------------------------
                              Stepan Stepanian


                                       2
<PAGE>
 
                            CERTIFICATE OF AMENDMENT
                                       OF
                           ARTICLES OF INCORPORATION
                           -------------------------


          George Joseph and Judy Walters certify that:

          1.  They are the President and Secretary, respectively, of California
                                                                     ----------
General Management, Inc., a California corporation;
------------------------                           

          2.  Article ONE of the Articles of Incorporation of this corporation
is amended to read as follows:

              "ONE: The name of this corporation is Mercury General
          Corporation."

          3.  Article SEVEN of the Articles of Incorporation of this corporation
is amended to read as follows:

              "SEVEN: The corporation is authorized to issue only one class of
               -----
          shares to be designated "Common Stock." The total number of said
          shares which the corporation shall have authority to issue is Fifteen
          Million (15,000,000) shares; and, the shares shall be without par
          value. Upon the amendment of this Article to read as hereinabove set
          forth, each outstanding share of a par value of $100 is split up and
          converted into 219,047,619 shares of Common Stock, without par value."

          4.  Article NINTH of the Article of Incorporation of this corporation
is amended to read as follows:

              "NINTH: Any of the following actions shall require the prior
               -----
          approval (by vote or written consent) of the shareholders entitled to
          exercise not less than 66-2/3% of the voting power of the corporation,
          notwithstanding that applicable law would otherwise permit such
          actions with the approval of a lesser percentage: (a) any amendment of
          these Articles of Incorporation; or (b) merger or consolidation of the
          corporation with any other corporation, except the merger of wholly-
          owned subsidiary of this corporation; or (c) sale, lease, conveyance,
          exchange, transfer or other disposition of all or substantially all of
          the assets of this corporation."

                                       1
<PAGE>
 
          5.  The foregoing amendments of Articles of Incorporation have been
duly approved by the board of directors.

          6.  The foregoing amendments of Articles of Incorporation have been
duly approved by the required vote of shareholders in accordance with Section
902 of the Corporations Code.  The total number of outstanding shares of the
corporation is 52.5.  The number of shares voting in favor of the amendment
equaled or exceeded the vote required.  The percentage vote required was more
than 50%.

          We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of our own knowledge.

          Dated:  October 27, 1985


                              /s/  George Joseph
                              ------------------------------
                              George Joseph, President



                              /s/  Judy Walters
                              ------------------------------
                              Judy Walters, Secretary

                                       2
<PAGE>
 
                           CERTIFICATE OF CORRECTION
                           -------------------------
                                       OF
                            CERTIFICATE OF AMENDMENT
                                       OF
                           ARTICLES OF INCORPORATION
                                       OF
                          MERCURY GENERAL CORPORATION

          George Joseph and Judy Walters certify that:

          1.  They are the President and Secretary, respectively, of Mercury
                                                                     -------
General Corporation.
------------------- 

          2.  The name of the corporation is Mercury General Corporation, and it
is a California corporation.

          3.  The instrument being corrected is entitled "CERTIFICATE OF
AMENDMENT OF ARTICLES OF INCORPORATION", and said instrument was filed with the
Secretary of State of the State of California on October 15, 1985.

          4.  Paragraph "3" of said Certificate of Amendment, as corrected,
should read as follows:

          Article SEVEN of the Articles of Incorporation of this corporation is
amended to read as follows:

              "SEVEN: The corporation is authorized to issue only one class of
               -----
          shares to be designated "Common Stock." The total number of said
          shares which the corporation shall have authority to issue is Fifteen
          Million (15,000,000) shares; and, the shares shall be without par
          value. Upon the amendment of this Article to read as hereinabove set
          forth, each outstanding share of a par value of $100 is split up and
          converted into 219,047,619 shares of Common Stock, without par value."

          5.  Said paragraph "3", as corrected, conforms the wording of the
amended article to that adopted by the board of directors and shareholders.

                                       1
<PAGE>
 
          We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Date:  October 26, 1985

                              /s/  George Joseph
                              ------------------------------
                              George Joseph, President


                              /s/  Judy Walters
                              ------------------------------
                              Judy Walters, Secretary

                                       2
<PAGE>
 
                            CERTIFICATE OF AMENDMENT
                                       OF
                           ARTICLES OF INCORPORATION
                                       OF
                          MERCURY GENERAL CORPORATION

George Joseph and Judy A. Walters certify that:

          1.  They are the President and the Secretary, respectively, of MERCURY
GENERAL CORPORATION, a California corporation.

          2.  Articles TEN and ELEVEN of the Articles of Incorporation of this
corporation are added to read in their entirety as follows:

              "TEN: The liability of the directors of the corporation for
               ---
          monetary damages shall be eliminated to the fullest extent permissible
          under California law.

              "ELEVEN: The corporation is authorized to provide indemnification
               ------
          of agents (as defined in Section 317 of the Corporations Code) for
          breach of duty to the corporation and its stockholders through bylaw
          provisions or through agreements with the agents, or both, in excess
          of the indemnification otherwise permitted by Section 317 of the
          Corporations Code, subject to the limits on such excess
          indemnification set forth in Section 204 of the Corporations Code."

          3.  The foregoing amendment of Articles of Incorporation has been duly
approved by the Board of Directors.

          4.  The foregoing amendment of Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 902 of
the Corporations Code.  The total number of outstanding shares of the
corporation is 13,505,000.  The number of shares voting in favor of the
amendment equaled or exceeded the vote required.  The percentage vote required
was more than 66 2/3%.

                                       1
<PAGE>
 
          We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of our own knowledge.

Dated:  June 1, 1988

                              /s/  George Joseph
                              ------------------------------
                              George Joseph, President

                              /s/  Judy A. Walters
                              ------------------------------
                              Judy A. Walters, Secretary

                                       2
<PAGE>
 
                            CERTIFICATE OF AMENDMENT
                                       OF
                           ARTICLES OF INCORPORATION

Keith L. Parker and Judy A. Walters certify that:

1.   They are the vice president and the secretary, respectively, of Mercury
     General Corporation, a California corporation.

2.   Article SEVEN of the articles of incorporation of this corporation is
     amended to read as follows:

         "SEVEN. The corporation is authorized to issue only one class of shares
          -----
     to be designated "Common Stock." The total number of said shares which the
     corporation shall have authority to issue is Thirty Million (30,000,000)
     shares; and, the shares shall be without par value. Upon the amendment of
     this Article to read as hereinabove set forth, each outstanding share is
     split up and converted into two shares of Common Stock."

3.   The foregoing amendment of articles of incorporation has been duly approved
     by the board of directors.

4.   Pursuant to Section 902(c) of the California Corporations Code, the vote of
     the shareholders of the corporation is not required to effect the foregoing
     amendment of articles of incorporation.

We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of my own knowledge.

Date:  August 25, 1992


                              /s/  Keith L. Parker
                              ---------------------------
                              Keith L. Parker
                              Vice President


                              /s/  Judy A. Walters
                              ---------------------------
                              Judy A. Walters
                              Secretary

                                       1
<PAGE>
 
                          CERTIFICATE OF AMENDMENT OF
                           ARTICLES OF INCORPORATION
                                       OF
                          MERCURY GENERAL CORPORATION
                                        
          George Joseph and Judy Walters certify that:

          1.  They are the chairman of the board of directors and the secretary,
respectively, of MERCURY GENERAL CORPORATION, a California corporation.

          2.  Article SEVEN of the articles of incorporation is amended to read:

              "SEVEN: The corporation is authorized to issue only one class of
shares to be designated "Common Stock." The total number of said shares which
the corporation shall have the authority to issue is Thirty-Five Million
(35,000,000) shares; and, the shares shall be without par value."

          3.  The amendment herein set forth has been duly approved by the board
of directors.

          4.  The amendment herein set forth has been duly approved by the
required vote of the shareholders in accordance with Section 902 of the
Corporations Code.  The corporation has only one class of shares and the number
of outstanding shares is 27,531,425.  The number of shares voting in favor of
the amendment equaled or exceeded the vote required.  The percentage vote
required for the approval of the amendment herein set forth was not less than
66-2/3% of the voting power of the corporation.


                                    /s/  George Joseph
                                    ---------------------------
                                    George Joseph, Chairman of
                                    the Board of Directors


                                    /s/  Judy Walters
                                    ---------------------------
                                    Judy Walters, Secretary

          The undersigned further declare under penalty of perjury under the
laws of the State of California that they have read the foregoing certificate
and know the contents thereof and that the same is true of their own knowledge.

          Executed at Los Angeles, California on August 14, 1997.


                                    /s/  George Joseph
                                    ---------------------------
                                    George Joseph

                                    /s/  Judy Walters
                                    ---------------------------
                                    Judy Walters

                                       1
<PAGE>
 
                          CERTIFICATE OF AMENDMENT OF
                           ARTICLES OF INCORPORATION
                                       OF
                          MERCURY GENERAL CORPORATION
                                        
          George Joseph and Judy Walters certify that:

          1.  They are the chairman of the board of directors and the secretary,
respectively, of MERCURY GENERAL CORPORATION, a California corporation.

          2.  Article SEVEN of the articles of incorporation is amended to read:

              "SEVEN:  The corporation is authorized to issue only one class of
               -----                                                           
shares to be designated "Common Stock."  The total number of said shares which
the corporation shall have authority to issue is Seventy Million (70,000,000)
shares; and, the shares shall be without par value.  Upon the amendment of this
Article to read as hereinabove set forth, each outstanding share is split up and
converted into two shares of Common Stock."

          3.  The amendment herein set forth has been duly approved by the board
of directors.

          4.  Pursuant to Section 902(c) of the California Corporations Code,
the vote of the shareholders of the corporation is not required to effect the
foregoing amendment of articles of incorporation.

          5.  The corporation has only one class of shares outstanding and the
amendment effects only a stock split and an increase in the authorized number of
shares in proportion to the split.

                                    /s/  George Joseph
                                    ---------------------------
                                    George Joseph, Chairman of
                                    the Board of Directors

                                    /s/  Judy Walters
                                    ---------------------------
                                    Judy Walters, Secretary


          The undersigned further declare under penalty of perjury under the
laws of the State of California that they have read the foregoing certificate
and know the contents thereof and that the same is true of their own knowledge.

          Executed at Los Angeles, California on August 27, 1997.

                                    /s/  George Joseph
                                    ---------------------------
                                    George Joseph

                                    /s/  Judy Walters
                                    ---------------------------
                                    Judy Walters

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