Auto Insurance: California's Mandatory Law

Auto insurance is mandatory in California. The state requires all vehicle owners to show proof of insurance or another form of financial responsibility to register a vehicle. This means that drivers must be able to cover the costs of injuries and property damage in the event that they cause an accident. While there are a few ways to meet the state's financial responsibility requirements, the most common way is to purchase car insurance from a reputable company. The minimum requirements for liability car insurance coverage in California are $15,000 for injury or death to one person, $30,000 for injury or death to multiple people, and $5,000 for property damage.

What is 'financial responsibility' in California?

In California, vehicle owners need to show proof of insurance or another form of "financial responsibility" to register their vehicle. Financial responsibility laws require drivers to have auto liability insurance before they can legally drive a motor vehicle. This means that drivers must be financially able to provide monetary protection to those injured or having property damaged in vehicle accidents, regardless of fault.

In California, the Compulsory Financial Responsibility Law ensures that drivers and owners of vehicles are financially responsible for any damage or injury caused by a traffic accident, regardless of fault, and to remove financially irresponsible drivers from the highways. Financial responsibility is commonly known as insurance and is required on all vehicles operated or parked on California roadways.

There are several ways to meet the state's financial responsibility requirements. The most common way is to purchase car insurance from a reputable insurance company. This helps avoid losing your registration and facing other penalties, and it provides financial protection in the event that you get injured in an accident. The minimum requirements for car insurance in California are:

• $15,000 in bodily injury liability coverage for injury or death to one person
• $30,000 in bodily injury liability coverage for injury or death to multiple people
• $5,000 in property damage coverage for damage to other drivers' vehicles

If you choose not to purchase car insurance, there are three other ways to meet the financial responsibility requirements: a cash deposit of $35,000 with the DMV, a DMV-issued self-insurance certificate, or a $35,000 surety bond from an issuer licensed to do business in California.

Drivers must carry evidence of financial responsibility in their vehicle at all times and provide it when requested by law enforcement, when renewing vehicle registration, or when the vehicle is involved in a traffic collision. Failure to provide evidence of financial responsibility can result in fines of up to $500 and the loss of your driver's license.

What are the minimum insurance requirements?

In California, vehicle owners are required to show proof of insurance (or another form of "financial responsibility") to register a vehicle. This proof of insurance must be carried in the vehicle at all times and provided when requested by law enforcement, when renewing the vehicle registration, or when the vehicle is involved in a traffic collision.

The minimum insurance requirements in California are as follows:

• $15,000 for injury or death to one person (another driver, passenger, pedestrian, etc.) in an accident you cause. This is known as bodily injury liability coverage.
• $30,000 for injury or death to more than one person in an accident you cause.
• $5,000 for damage to property in an accident you cause. This is known as property damage liability coverage.
• $15,000 per person/$30,000 per accident minimum for uninsured motorist bodily injury coverage.
• $3,500 minimum for uninsured motorist property damage coverage.

These are the minimum insurance requirements in California, but it is recommended that drivers carry more coverage to protect themselves financially in the event of a serious crash. Once the policy limits are reached, the driver will be personally liable for any additional costs.

While the majority of vehicle owners in California choose to meet the financial responsibility requirements by purchasing a car insurance policy, there are a few alternative ways to comply:

• Make a cash deposit of $35,000 with the California Department of Motor Vehicles (DMV).
• Obtain a self-insurance certificate from the California DMV. This option is only available to those with a net worth of at least $2.2 million and a fleet of 25 or more cars.
• Obtain a surety bond for $35,000 from an issuer licensed to do business in California.

What happens if you don't have insurance?

Driving without insurance in California can have serious consequences. If you're caught driving without insurance, you will likely receive a fine. The fine for a first-time offence is typically between $100 and $200, but with penalty assessments added on top, this could increase to $390 or more. If you are caught driving without insurance in California more than once within a three-year period, the fine increases to between $200 and $500, and with penalty assessments, this could total between $1,020 and $1,800.

If you are caught driving without insurance, the court could also impound your vehicle, even if it is your first offence. You will also face the suspension of your vehicle's registration, meaning you cannot drive or park it on public roads until proof of insurance is submitted. If you are caught driving without insurance after this, you will be fined and your driver's license may be suspended.

If you cause an accident while driving without insurance, you will be responsible for paying for the other person's vehicle repairs and medical expenses out of your own pocket. If you are unable to pay, the other driver could sue you, and your wages could be garnished until the amount is paid in full. If you are not at fault for the accident, the other driver's liability policy will pay for your car repairs and medical bills, but because California is a "'no pay, no play' state, you cannot claim non-economic damages such as pain and suffering.

What if you can't afford insurance?

In California, vehicle owners are required to show proof of insurance (or another form of "financial responsibility") to register a vehicle. While the law does not state that drivers in California must carry auto insurance, most vehicle owners choose to purchase liability insurance coverage to comply with the state's "financial responsibility" laws.

If you can't afford car insurance in California, you should not cancel your policy. Instead, start by contacting your insurer about payment options and discounts. Here are some options to consider if you can't afford car insurance:

• Contact your insurance company: Get in touch with your insurance agent or company as soon as possible if you know you can't afford an upcoming bill. You may be allowed to delay it or have it combined into future payments. Insurers typically offer a grace period in which you can pay without risking a policy cancellation.
• Check for discounts: Ask your insurance company about the discounts they offer. While these vary by insurer, you could get savings for having a student with good grades, bundling your car insurance with another policy, or signing up for automatic payments and paperless billing.
• Raise your deductible: Increasing your deductible will lower your car insurance costs. If you're a safe driver who hasn't filed a claim in the past or don't drive often, you might consider raising your deductible. Only do this if you can afford the larger deductible in the event of a claim.
• Change your coverage: If you drive an older car and your policy includes comprehensive and collision coverage, you can likely drop both as they only pay out up to your car's market value, minus your deductible. To get cheaper insurance, carry only the state's required minimum amount. Good drivers with minimum coverage pay an average of $561 per year compared to $1,630 for full coverage.
• Consider pay-per-mile insurance: Pay-per-mile insurance is priced by combining a monthly base rate and a mileage rate, which takes into account the number of miles you drive. If you drive infrequently, use public transportation, or need to insure a rarely used second vehicle, this might be a cheaper option.
• Shop for a new policy: Shopping around for new insurance is often the best way to get cheaper rates. Compare quotes from at least three different insurance companies at least once a year to ensure you're getting the best rate.
• Use alternative transportation: If you've tried the above options and still can't afford insurance, consider using public transportation, rideshare services, carpooling, or even walking or biking for short distances.
• Get a non-owner car insurance policy: If you have access to someone else's vehicle, consider getting a non-owner car insurance policy, which is typically less expensive than a standard one. It will pay for injuries or damage you cause in an accident and help you avoid an insurance lapse, which can increase your premium when you switch back to a standard policy.

If you can't afford standard insurance premiums, you may be eligible for California's Low-Cost Automobile Insurance Program (CLCA). This program helps income-eligible drivers with good driving records purchase liability insurance that meets state requirements at affordable rates. To qualify for CLCA, you must have a valid California driver's license, own a car valued at $25,000 or less, meet income eligibility requirements, be at least 16 years old, and have a good driving record. CLCA policies only cover minimal liability insurance: $10,000 per person, $20,000 per accident, and $3,000 for property damage. The current annual cost of CLCA insurance for basic coverage ranges from $244 to $966, with discounts available for licensed drivers with a good driving record for three years.

What if you're in an accident with an uninsured driver?

In California, if you are in an accident with an uninsured driver, you still have options. Firstly, California law requires insurance companies to offer uninsured motorist coverage, so if you have this coverage, you can file a claim with your insurance company. Secondly, you can pursue a personal injury lawsuit against the at-fault driver directly. Thirdly, you can file a claim under your own uninsured motorist (UM) policy, although this is optional insurance.

If you are not at fault in the accident, the at-fault driver's insurance company is responsible for paying any resulting damages. A lawyer can help you notify and file a claim with the at-fault driver's insurance company and protect your rights. However, it is important to note that California is a \"No Pay, No Play\" state, which means that you cannot get money for non-economic damages such as pain and suffering.

If you are at fault in the accident and do not have insurance, you will be individually liable for any damages. The other driver may file a claim with their own insurer, but if they don't have enough coverage, they may file a lawsuit against you. If you have substantial assets, they may succeed in their case against you, and the court will likely order you to make payment. In this case, it is in your best interest to consult with an attorney and negotiate a settlement before the case goes to court.

It is crucial to remain calm and take the following steps if you are involved in a car accident without insurance in California:

• Check if everyone involved is safe and call 911 if necessary.
• Exchange information with the other parties involved, including names, contact details, and vehicle information.
• Report the accident to the police.
• Gather witness contact information as they can provide crucial statements on how the crash occurred.
• Consult a lawyer promptly for guidance and help navigating any potential legal consequences. Without insurance, you may be personally liable for damages and medical expenses.
• Do not leave the scene of the accident, as this is against the law in California.
• Check on the other driver and call 911 if anyone is injured and requires medical attention. Exchange contact information and ask for their insurance information.
• Do not apologize or admit guilt, even if you were at fault.
• Take photos or videos of the location, the vehicles, your injuries, any debris, and the road conditions.
• Seek medical attention as soon as possible, even if you were not taken to the hospital.

In summary, if you are in an accident with an uninsured driver in California, you can file a claim with your insurance company if you have uninsured motorist coverage, pursue a lawsuit against the at-fault driver, or consult with an attorney to explore other options for compensation. If you are not at fault, the at-fault driver's insurance company will be responsible for paying damages, but you cannot claim for non-economic damages. If you are at fault and uninsured, you may be liable for damages and it is recommended to consult with an attorney. Taking specific steps after the accident and remaining calm are crucial for your safety and protection.

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