California Comprehensive Auto Insurance: Required?

In California, drivers are required to have auto insurance or some form of financial responsibility before driving. This means that drivers must show financial responsibility for any vehicle they own, in case of injury to other people or damage to their property. While car insurance is the easiest way to meet the financial responsibility requirement, there are alternative forms of coverage. If you're caught driving without insurance in California, you will likely have to pay fines and surrender your driver's license.

California's Low-Cost Automobile Insurance Program

California requires all drivers to have auto insurance or some form of financial responsibility before driving. While car insurance is the easiest way to meet the financial responsibility requirement, there are alternative forms of coverage. If you're caught driving without insurance in California, you will likely have to pay fines and surrender your driver's license.

• $10,000 of bodily injury or death liability per person
• $20,000 of bodily injury or death liability per accident
• $3,000 property damage liability per accident

Unlike a regular auto insurance policy, the CLCA policy is not very customizable. Comprehensive and collision coverage are not available through this program; drivers seeking these types of insurance would need to purchase them from a separate provider. However, CLCA policyholders may add the following coverages to their policies for an added cost of around $43 to $82 per year:

• $1,000 of medical payments coverage per person
• $10,000 of uninsured motorist bodily injury per person
• $20,000 of uninsured motorist bodily injury per accident

The CLCA program is not meant for those who are simply looking for cheap insurance. It is strictly for motorists whose income is below the federal poverty level. To be eligible for the program, you must:

• Have a valid California driver's license
• Own a vehicle worth no more than $25,000
• Be at least 16 years old (applicants under 18 must be legally emancipated)
• Meet income eligibility requirements
• Have a good driving record

Income eligibility requirements vary based on the size of your household. For a one-person household, the income must be $37,650 or less per year, while for a four-person household, it must be $78,000 or less per year.

To apply for the CLCA program, you need to either visit the CLCA website and fill out the questionnaire or get in touch with a CLCA agent. The enrollment process is straightforward, and you can click the "Apply Online" button on the website, choose an agent, and submit the required information. The cost of the CLCA program ranges from $198 to $802 per year, and drivers can pay all at once or put 20% down and pay the remainder in seven installments. However, each installment will incur a $4 transaction fee.

The minimum liability insurance in California

In California, drivers are required to have auto insurance or some form of financial responsibility before driving. The minimum liability insurance requirements in California are:

• $15,000 for injury/death to one person
• $30,000 for injury/death to more than one person
• $5,000 for damage to property

These limits are set to change at the start of 2025, when California drivers will be required to carry liability insurance as follows:

• $30,000 bodily injury liability per person
• $60,000 bodily injury liability per accident
• $15,000 property damage liability per accident

Liability insurance is the only type of insurance that is required for California drivers. This includes both bodily injury and property damage liability coverage. Bodily injury liability insurance covers the other party's medical expenses if an accident is deemed your fault. Property damage liability insurance covers repairs to the other party's vehicle if you are at fault, up to $5,000 per accident.

While car insurance is the easiest way to meet the financial responsibility requirement, there are alternative forms of coverage. These include:

• A cash deposit of $35,000 with the Department of Motor Vehicles (DMV)
• A DMV-issued self-insurance certificate (if you own more than 25 vehicles in your name)
• A surety bond for $35,000 from a company licensed to do business in California

If you are unable to afford liability insurance, you may be eligible for the California Low-Cost Automobile Insurance Program. This program helps income-eligible good drivers get insurance with lower limits that still satisfy state auto insurance laws. To be eligible, you must have a valid California driver's license, a vehicle worth $25,000 or less, and a household income that meets the program requirements.

Alternative forms of financial responsibility

In California, drivers are required to have auto insurance or some form of financial responsibility. While car insurance is the most common way to meet the financial responsibility requirement, there are alternative forms of coverage. These include:

• A cash deposit of $35,000 in a savings account with any bank. The DMV Financial Responsibility Unit will then need to be contacted to fill out and submit an application form. This account must always hold $35,000, which the DMV can draw from if you are at fault in a car accident.
• A certificate of self-insurance from the DMV. This is available if you own more than 25 vehicles in your name. The certificate states that you can cover medical bills, car repairs and property damage expenses as a minimum-liability policy would. The DMV may require evidence that you can meet these financial demands before issuing the certificate.
• A surety bond for $35,000 from a company licensed to do business in California. This guarantees that you will cover medical bills, car repairs and other property damage expenses in the event you are at fault in a car accident. If you are unable to pay, the surety company will step in and seek payment from you later.

Collision and comprehensive coverage

While collision and comprehensive coverage are not required by California state law, they are typically required for a car loan or lease. These two types of auto insurance protect your vehicle when it is damaged, but the type of damage covered by each is different.

Collision coverage covers damage to your vehicle caused by a collision with another vehicle or object. This may include repairs or a full replacement of your covered vehicle. For example, if you rear-end another car and need to replace your bumper, collision coverage will cover the cost.

Comprehensive coverage, on the other hand, covers damage to your vehicle caused by non-collision incidents, such as theft, vandalism, fire, hail, animal damage, or falling trees. For instance, if your car is vandalised or a tree falls on it, comprehensive coverage will pay for the repairs.

The cost of comprehensive coverage is usually lower than that of collision coverage, although this may vary depending on the insurer, your location, the value of your vehicle, and other factors. You can adjust the cost by opting for a higher or lower deductible, which is the amount you pay out of pocket before your insurance coverage kicks in. The deductible for both collision and comprehensive coverage is typically between $100 and $2,000, and choosing the same deductible for both can make it easier to predict your out-of-pocket costs.

It's important to note that neither collision nor comprehensive coverage will pay for damage to other vehicles involved in an accident. Additionally, these coverages provide compensation based on the market value of your car, and they do not cover mechanical breakdown, normal wear and tear, or maintenance. While these coverages are optional, they can provide valuable protection for your vehicle, especially if you live in an area with a high risk of vehicle damage or have a high-value car.

Uninsured/underinsured motorist coverage

In California, drivers are not required by law to have uninsured/underinsured motorist coverage. However, it is a good idea to have this type of coverage as California is in the top 10 states with the highest percentage of uninsured motorists.

Uninsured motorist coverage covers damage and medical costs if you are involved in an accident with a driver who does not have car insurance. Underinsured motorist coverage will cover injuries and damages beyond the limits of the other driver's policy.

There are two types of underinsured and uninsured motorist coverage: uninsured/underinsured bodily injury and uninsured/underinsured property damage. Bodily injury coverage covers medical bills for you and your passengers, as well as lost wages and pain and suffering damages. Property damage covers the cost of repairs to your vehicle.

If you are in an accident with an uninsured or underinsured driver, your uninsured/underinsured motorist coverage will only apply if the other driver's liability limits are lower than your coverage. For example, if the other driver has a $15,000 liability policy and you have a $15,000 UMC/UIM policy, you are not entitled to any benefits. However, if you had $30,000 in UMC/UIM coverage, you could make a claim for up to $15,000 from your policy.

To trigger your UMC/UIM coverage, you must meet certain requirements. These include exhausting the limits of the at-fault driver's policy and providing proof, such as a copy of a settlement agreement, to your insurance carrier. Some policies also require that your claim be litigated via arbitration rather than through the civil court system.

Frequently asked questions