Auto Insurance In California: Why Am I Uninsurable?

Driving without insurance in California is illegal and can result in serious consequences, including fines, vehicle impoundment, and suspension of driving privileges. The penalties vary depending on the situation and whether it is a first-time or repeat offense. Fines for driving without insurance in California typically range from $100 to $500, with penalty assessments potentially increasing the total cost significantly. Vehicle impoundment and suspension of driving privileges for up to four years are also possibilities, especially for repeat offenders. Additionally, uninsured drivers involved in accidents may face personal liability for damages and medical expenses, as well as limitations on recovering non-economic damages.

California's high insurance costs

California's auto insurance costs are high compared to other states, with the average cost of full coverage being $2,645 per year, and $631 per year for minimum coverage. The national average for full coverage is $2,348, and $639 for minimum coverage, so it is an expensive place to buy insurance.

There are a number of reasons why insurance costs are high in California. Firstly, the state has a high number of uninsured drivers, with 16.6% of drivers in the state uninsured in 2023, according to a study by the Insurance Research Council. This is well above the national average of 12.6%.

Secondly, California has a high rate of motor vehicle thefts, with 202,685 reported in 2022, ranking it first in the country for this category. The state also has a high rate of natural disasters, which pose a substantial risk to cars and other property. The Federal Emergency Management Agency (FEMA) has rated the risk of property damage from natural disasters in California as "very high". The frequency of major climate events such as flooding, wildfires and droughts has also increased in recent years, causing more consumer price index-adjusted losses.

Other factors that contribute to high insurance costs in California include the dense population in urban areas, which increases the likelihood of accidents, and the high cost of vehicle repairs, parts and medical expenses in these areas.

To lower insurance costs, California drivers can compare rates from different providers, bundle their coverage, raise their deductible, lower their coverage limits, or drop optional coverages. The California Low-Cost Auto Insurance Program is also available for low-income drivers who cannot afford standard insurance.

The legal repercussions of driving without insurance

Driving without insurance in California can have serious legal repercussions. If you are caught driving without insurance, you could be fined between $100 and $200 for a first offence, and between $200 and $500 for a second offence. These base fines can increase to between $400 and $1,800 once penalty assessments are added.

If you are caught driving without insurance in California, your vehicle may be impounded, and your license and registration may be suspended. If you are involved in an accident while driving without insurance, your license will be suspended for up to four years, regardless of who was at fault. If you are at fault for the accident, you will be responsible for paying for the other person's vehicle and medical expenses. You could be sued, and your wages could be garnished.

California is a "no pay, no play" state, which means that an uninsured driver cannot pursue non-economic damages, such as emotional distress after an accident, even if they were not at fault.

The financial repercussions of driving without insurance

Driving without insurance in California can have serious financial repercussions. The state takes this issue very seriously, and the penalties for driving without insurance can be severe, especially for repeat offenders. Here are some of the financial repercussions you may face if caught driving without insurance in California:

Fines and Fees

If you are caught driving without insurance in California, you will likely be fined. The fine for a first offence is typically between $100 and $200, but penalty assessments can be added on top of this, increasing the total cost significantly. For example, a $100 fine can rise to $390 when all penalties are included. For a second offence, the fine increases to between $200 and $500, and penalty assessments can bring the total cost to as much as $1,800.

Increased Insurance Costs

Once you have been caught driving without insurance, you will likely find that the cost of car insurance increases. Insurance companies may view you as a higher-risk driver, and as a result, you may have to pay more for your policy. This can make it even more challenging to maintain insurance coverage in the future.

Vehicle Impoundment

In some cases, the police officer who pulls you over has the right to impound your vehicle if you cannot show proof of insurance. You will then be responsible for towing fees and other costs associated with getting your vehicle back.

License Suspension

If you are caught driving without insurance in California, your driver's license may be suspended. This can last for up to one year for a first offence and up to four years for subsequent offences. To get your license reinstated, you will need to provide proof of insurance and maintain an SR-22 form for a certain period.

Accident Costs

If you are in an accident while driving without insurance in California, you will be personally liable for any damage or injuries you cause. This can result in high out-of-pocket costs and even financial catastrophe. The average critically injured car accident survivor amassed nearly $980,000 in medical costs and lost wages, according to a 2019 report. If you cannot pay these costs upfront, you may be sued, and your wages could be garnished until the debt is paid.

Limited Recourse

Even if you are not at fault in an accident, driving without insurance in California can limit your recourse for damages. California is a "no pay, no play" state, which means that an uninsured driver cannot sue an insured at-fault driver for non-economic damages such as pain and suffering.

The minimum insurance requirements in California

In California, all drivers are legally required to have car insurance or some form of financial responsibility before driving. The state's minimum insurance requirements 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 are often referred to as "15/30/5" and have been in place since 1967. However, effective January 1, 2025, the minimum financial responsibility requirements will increase to:

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

Drivers in California must carry either proof of liability insurance or an acceptable alternative. Failure to present valid proof of insurance that meets the state's minimum requirements could result in a large fine.

There are four types of acceptable insurance in California:

• Motor vehicle liability insurance policy
• Cash deposit of $35,000 with the DMV
• DMV-issued self-insurance certificate
• Surety bond for $35,000 from a company licensed to do business in California

If you cannot afford liability insurance, you may be eligible for the California Low-Cost Automobile Insurance Program. This program offers affordable liability coverage to low-income drivers to help them meet the legal requirements.

How to obtain affordable insurance in California

In California, all drivers are legally required to have car insurance. The cost of car insurance in the state is higher than the national average, and rates have increased by 18.9% over the last year. However, there are several ways to obtain affordable insurance in California. Here are some tips to help you get started:

• Shop around and compare rates: This is one of the most effective ways to find affordable car insurance. Compare quotes from multiple insurance companies and consider both large and midsize insurers. You can do this by visiting their websites, calling them, or using an online comparison tool.
• Look for discounts: Ask about car insurance discounts that may be available to you. Common discounts include good student discounts, loyalty discounts, good driver discounts, vehicle security discounts, and paid-in-full discounts.
• Bundle your insurance policies: Consider bundling your car insurance with other types of insurance, such as homeowners or renters insurance. Many companies offer multi-policy discounts that can help you save on both your car insurance and other insurance policies.
• Increase your deductible: Opting for a higher deductible can lower your insurance premium instantly. However, make sure you can afford to pay the deductible if you need to file a claim.
• Maintain a clean driving record: A poor driving record, including speeding tickets, accidents, and DUIs, will increase your insurance rates. Keeping a clean driving record can help you qualify for good driver discounts and lower your insurance costs.
• Choose your vehicle wisely: When shopping for a car, consider the cost of insurance. Vehicles that are cheaper to repair or replace typically have lower insurance rates. Also, consider the safety record and theft statistics of the vehicle, as these factors can impact insurance rates.
• Drop unnecessary coverage: If you have an older car, you may consider dropping comprehensive and collision coverage. Additionally, you may not need rental reimbursement coverage or personal injury protection if you have access to alternative transportation or if you already have good health insurance coverage.
• Sign up for usage-based insurance or pay-per-mile insurance: These programs offer cheaper rates for drivers who drive fewer miles per year, usually between 7,500 and 10,000 miles. You may need to install a small device in your vehicle to monitor mileage and driving habits.
• Explore group insurance options: Some employers, professional associations, alumni groups, and other organizations offer group insurance plans or affinity discounts. Check with your employer or any groups you are affiliated with to see if they offer these benefits.
• Improve your credit score: Having a good credit score can help you get cheaper car insurance. Work towards improving your credit score by paying your bills on time, maintaining low credit card balances, and regularly reviewing your credit report.
• Take advantage of the California Low-Cost Automobile Insurance Program (CLCA): If you meet certain income and vehicle value requirements, you may be eligible for this state-sponsored program, which offers affordable liability coverage to low-income drivers.

Frequently asked questions