California Car Insurance Laws

When shopping for car insurance, California drivers need to keep their state’s insurance laws in mind. Like most states, California requires drivers to have a policy that meets certain bodily injury per person, bodily injury per accident, and property damage minimums. Driving without sufficient insurance can result in fines and other penalties, so it’s important for drivers to do their research. Here is everything you need to know about California car insurance laws.

Do Drivers in California Have to Carry Auto Insurance?
According to the state’s DMV website, California requires insurance on all vehicles operated or parked on California roads. However, purchasing a liability policy from an auto insurance company is only one way to meet this requirement. California recognizes three other types of insurance:

Self-insurance certificate issued by the DMV
Cash deposit of $35,000 made to the DMV
Surety bond for $35,000 issued by a company licensed in California.

For many people, a motor vehicle liability insurance policy is the only feasible option. However, if you are interested in learning more about the self-insurance or cash deposit options, you can call 916-657-6520 to talk to the DMV Financial Responsibility Unit.

Alternatively, the state’s Department of Insurance can help you find a company that issues surety bonds. This department can be reached online at insurance.ca.gov or by calling 800-927-4357.

What Are the Minimum Auto Insurance Requirements in California?
Under California Insurance Code §11580.1b, auto insurance policies in California must meet the following minimum liability requirements:

$15,000 for injury or death to one person
$30,000 for injury or death to more than one person
$5,000 for property damage
Although comprehensive and collision policies are often a worthwhile investment for drivers, these types of policies do not fulfill the state’s minimum insurance requirements. To be in compliance, you must also have a liability policy to compensate other people for injuries or damage that you cause.

California does have a low-cost auto insurance program for those who cannot afford liability insurance. You can call 866-602-8861 to learn more.

Do I Need to Provide Any Insurance Documentation to the DMV?
Yes. You will need to provide proof of insurance to the DMV when registering your vehicle in California. This could be an ID card or other document from your insurance company. If you elect to be self-insured or make a cash deposit, you will need a DMV authorization letter. Drivers who have had their license suspended will need a California Proof of Insurance Certificate, or SR-22 form.

Note that California requires insurance providers to electronically report insurance information to the DMV. This rule only applies to policies for private-use vehicles, though — not those covered by commercial or business policies. If you decide to cancel your insurance, you must notify the DMV ahead of time by submitting an Affidavit of Non-Use (ANU). Otherwise, the state may suspend your vehicle registration.

What Are the Penalties for Being Uninsured?
In California, drivers should be ready to provide proof of insurance in the following situations:

When law enforcement asks you for proof of insurance
When your vehicle is involved in an accident
When you are renewing your vehicle registration.

If you cannot produce proof of insurance when required, you could face a fine — even if you do, in fact, have insurance. The state can also impound your vehicle if you are caught driving without insurance. Fines are as follows:

First offense: $100-$200, plus penalty assessment fees of $26 for every $10 of the base fine amount
Subsequent offenses: $200-$500, plus penalty assessment fees of $26 for every $10 of the base fine amount.

The penalties are steeper if you cannot provide proof of insurance after an accident. California requires you to report most vehicle accidents, and any drivers involved must present proof of insurance if the accident resulted in injuries, death, or property damage over $750. In this situation, driving without insurance (or proof of insurance) will result in a mandatory one-year suspension of your driver’s license.

After the one-year suspension, you can get your license reinstated. However, you will need an SR-22 to prove financial responsibility. You must maintain the SR-22 for three years after the suspension, and you will likely pay higher insurance rates during this time. For a second offense, you could face up to a four-year suspension. During the last three years, though, you could have your license reinstated through the same SR-22 process.

In the event that you did have insurance but simply couldn’t produce any proof on the spot, you can appeal in court. You will have to provide evidence that you were insured on the date the ticket was issued. The court may choose to withdraw the ticket and reduce your fine to a minimal $20 administrative fee.

Whose Insurance Pays If I’m in an Accident?
In “no-fault” states, each driver involved in an accident files a claim with their own insurance policy, regardless of who was at fault. Typically, drivers in these states must exhaust their own insurance policy before pursuing a claim against the driver who was at fault.

California, however, follows a “fault” system where drivers are financially responsible for medical bills or damage that result from an accident they caused. Under this system, you are free to make a claim against the at-fault driver’s insurance rather than your own. However, you may find that the other driver does not have enough insurance to cover all of your medical and repair bills.

That’s why optional coverages like personal injury protection (PIP), collision insurance, and uninsured/underinsured motorist coverage are so important. These policies can help make up the difference between what the other driver’s insurance pays and the total amount you need.

California car insurance laws are similar to those in other states that require drivers to maintain a minimum liability policy. However, meeting the base requirements may not be enough to protect you financially in the event of an accident. Consider investing in a full-coverage policy to minimize your risk.