Understanding California's Auto Insurance Requirements And Their Importance

California requires all drivers to have auto insurance or some form of financial responsibility. Motorists must carry proof of coverage while driving, and those who don't comply with the state's requirements are at risk of steep penalties. The state's minimum car insurance requirements include $15,000 in liability coverage for a single other driver's injury, $30,000 in coverage per accident, and $5,000 in coverage for property damage. California also offers a low-cost insurance program for eligible drivers.

Minimum liability insurance requirements

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 as follows:

• $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 requirements will increase effective January 1, 2025, as per Senate Bill 1107. The updated minimum liability insurance requirements will be:

• $30,000 for injury/death to one person.
• $60,000 for injury/death to more than one person.
• $15,000 for damage to property.

Liability insurance compensates a person other than the policyholder for personal injury or property damage. It is important to note that liability coverage does not pay for injuries to the policyholder or damage to their property.

While auto insurance is the easiest way to meet the financial responsibility requirement, there are alternative forms of coverage accepted by the state of California. These include:

• A cash deposit of $35,000 with the Department of Motor Vehicles (DMV).
• A DMV-issued self-insurance certificate, which is available 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.

Bodily injury liability insurance

In California, drivers are required to have auto insurance or some form of financial responsibility before driving. The state's minimum car insurance requirements include $15,000 in liability coverage for a single other driver's injury, $30,000 in coverage per accident, and $5,000 in coverage for property damage.

One of the requirements for drivers in California is to have bodily injury liability insurance. This type of insurance coverage pays for the other driver's medical expenses if an accident is deemed the policyholder's fault. The minimum coverage required by the state of California is $15,000 per person and $30,000 per accident. This means that if one person is injured in the accident, the insurance will cover up to $15,000 of their medical expenses. If multiple people are injured, the insurance will cover up to a total of $30,000, with the injured parties sharing the money.

It is important to note that these are the minimum coverage requirements, and drivers may want to consider purchasing higher limits. The minimum coverage may not be sufficient to cover all medical expenses, and drivers could be held financially responsible for any costs exceeding the coverage limits. Additionally, if a driver has assets, they may want to increase their liability limits to protect themselves in the event of a lawsuit.

For those who qualify based on income, California offers a Low-Cost Automobile Insurance Program (CLCA) with lower minimum coverage requirements. Under this program, the minimum bodily injury liability insurance coverage is $10,000 per person and $20,000 per accident.

Regardless of the coverage limits, it is essential for drivers in California to have bodily injury liability insurance to comply with the state's financial responsibility laws and to ensure they are prepared in the event of an accident.

Property damage liability insurance

California requires drivers to carry a minimum of $5,000 in property damage liability coverage. However, this may not be enough to cover all property damage in the event of an accident. Experts recommend higher limits, such as 100/300/100 or higher. Property damage liability coverage is relatively inexpensive, and it is recommended that drivers consider adding it to their policy.

It is important to note that property damage liability insurance does not cover injuries or damage to the policyholder's car. For that, separate uninsured motorist property damage coverage and collision coverage are needed.

Alternative forms of financial responsibility

In California, drivers must carry evidence of financial responsibility in their vehicles at all times. This can be demonstrated through a variety of alternative forms, including:

• A self-insurance certificate issued by the California Department of Motor Vehicles (DMV).
• A surety bond for $35,000 from an insurance company licensed to operate in California.
• A cash deposit of $35,000 with the DMV.
• A California Proof of Insurance Certificate (SR-22) form.
• A Notification of Alternative Forms of Responsibility (REG 5085) form.
• A Statement of Facts (REG 256) form, certifying that the motor carrier has evidence of insurance with the Public Utilities Commission or DMV.

These alternative forms of financial responsibility are important, as failing to meet California's financial responsibility requirements can result in fines, suspension of your license, and impoundment of your vehicle. The specific penalties for a first offence include a fine between $100 and $200, while subsequent offences result in fines ranging from $200 to $500.

It is worth noting that California's financial responsibility law does not require individuals to have car insurance. However, car insurance is the most common way people meet this requirement, as it typically aligns with the state's mandated minimum standards. These standards include a minimum of $15,000 for a single injury or death, $30,000 for injuries or deaths of more than one person in a single accident, and $5,000 for property damage.

California Low Cost Automobile Insurance Program

California requires all drivers to maintain evidence of financial responsibility. The California Low Cost Automobile Insurance Program (CLCA) was established by the Legislature in 1999 to provide income-eligible persons with affordable liability insurance protection. The program is designed to meet California's financial responsibility laws, which require drivers to carry at least the following auto insurance coverages:

• Bodily injury liability coverage: $15,000 per person / $30,000 per accident minimum
• Property damage liability coverage: $5,000 minimum
• Uninsured motorist bodily injury coverage: $15,000 per person / $30,000 per accident minimum
• Uninsured motorist property damage coverage: $3,500 minimum

The CLCA program offers liability-only coverage with the following policy limits:

• $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

To be eligible for the CLCA program, individuals must meet certain requirements:

• 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 (below 250% of the federal poverty level)
• Have a good driving record

Income eligibility requirements vary based on household size. For example, the limit is $37,650 or less per year for a one-person household and $91,450 or less per year for a five-person household

The CLCA program is administered by the California Automobile Assigned Risk Plan (CAARP) and offers seven payment plans without any broker's fee. The annual cost of the program ranges from $198 to $802, with the option to pay in installments.

While the CLCA program provides basic liability coverage, it does not include comprehensive and collision coverage. Drivers seeking additional protection would need to purchase these coverages separately. However, CLCA policyholders can add medical payments and uninsured motorist protection to their policies for an additional cost of around $43 to $82 per year.

Frequently asked questions