California Car Insurance

Last updated on April 26th, 2018

At any give time there are millions of vehicles on the road in the state of California and every single one of them is required by law to be insured with minimal levels of liability coverage. Every state in the U.S. requires some sort of liability auto insurance on vehicles in order for them to be legally operated but the minimum amount required by law varies from state to state. In California the minimum amount of individual bodily injury coverage is set at $15,000 while the amount of bodily injury coverage for two or more people is set at $30,000. Additionally, a minimum amount of $5,000 in property damage insurance must also be purchased. It is important to note that California only legally requires a vehicle to have liability coverage, which will pay for injury or damages suffered in an accident that was the fault of the policy holder, which means that in an accident the driver will be financially responsible for their own damages. In California, as in many other states, a driver is financially liable for any damages that result from an accident that was their fault. While the previously mentioned liability car insurance required by the state is designed to limit a driver’s financial responsibility in case of an accident, due to the relatively small minimum coverage amounts a driver may still be required to pay out of pocket if the damages are more than what their insurance policy covers. A driver with the minimum $5,000 in property damage insurance for example will be financially responsible for the cost of all damages over $5,000.Uninsured and underinsured coverage is not required by the state of California in order to legally operate a vehicle but the state does require insurance companies to offer both types of coverage to its customers.

In most states residents have no recourse but to satisfy state requirements regarding car insurance but in California there are a few other options for drivers that do not want to purchase an insurance policy. Under California’s Financial Responsibility law drivers are required to either meet California car insurance requirements or provide some other form of proof of financial responsibility in order to legally drive a vehicle. Aside from an insurance policy acquiring a certificate of self insurance, cash deposit with the DMV or a surety bond are the only other methods of satisfying California car insurance laws. The cash deposit options, which is currently set by the state government at $35,000, must be made at the DMV and acts as a form of self insurance. A surety bond in California that will exempt a driver from carrying an auto insurance policy requires the same amount as the cash deposit, making it a non-option for most drivers.  A self-insurance certificate is the cheapest of all four options since it requires no monthly payments or cash deposits but in California a self-insurance certificate is generally only issued to those that have 25 or more vehicles that need to be insured. A self-insurance certificate will also only be issued to those that have the financial resources to pay for any damages caused in an accident. Basically, the self-insurance certificate is intended for the wealthy individuals or businesses that own many vehicles and continuously have the money to pay for damages.

No matter which method is used to satisfy California’s financial responsibility requirements every driver is still required to carry proof of this satisfaction while driving. For those that purchased an insurance policy meeting the minimum coverage requirements set by the state, which is a vast majority of the population, proof will come in the form of an insurance card or even a copy of the insurance policy. For those that used one of the other methods a copy of the bond, certificate or deposit receipt will typically suffice. Proof that a driver has met the state’s financial responsibility requirements is needed for a variety of situations, including traffic accidents and vehicle registrations. If a driver is pulled over or involved in an accident and cannot provide proof of insurance they could be subject to a minimum $500 fine and may even have their registration suspended.  As of 2006 California requires all insurance companies to report a lapse in a driver’s auto insurance coverage to the DMV, meaning that a driver that doesn’t have insurance can get in trouble even without being pulled over or involved in an accident. If n insurance company reports than one of their customer’s dropped their coverage and they are not informed that coverage was renewed within a few days the driver’s registration could be suspended until proof of insurance is provided to the DMV. Also in 2006 California passed a law that gave law enforcement and court personnel access to DMV record in order to verify on the spot whether or not someone currently meets California’s car insurance regulations.