Drivers are required by California law to have car insurance coverage, but how do you know if the law applies to you? And what are the requirements for automobile insurance in California?
Strap in and sit back, because you’re about to get a crash course in California car insurance requirements.
Every California Driver Must Have Liability Insurance Coverage
The state of California mandates that every driver and vehicle owner must have a minimum amount of liability insurance coverage. Even drivers with an out-of-state license or no license at all still have to abide by the financial responsibility (insurance) requirements while driving in the state and in order to register a vehicle in California.
A liability insurance policy covers the cost of damage to property and/or bodily injury if you’re found to be at fault for a motor vehicle accident. The minimum amount of California liability coverage required for private passenger vehicles is:
$5,000 for property damage
$15,000 for injury/death to a single person
$30,000 for injury/death to more than one person
You can also fulfill the financial responsibility requirements without holding an insurance policy. This can be done by:
Making a deposit of $35,000 with the DMV.
Receiving a self-insurance certificate from the DMV.
Holding a $35,000 surety bond from a company licensed to do business in California.
The DMV Financial Responsibility Unit at (916) 657-6520 can provide additional information on self-insurance certificates and making a cash deposit.
Other types auto insurance that aren’t required by law but you may want to consider include:
Collision insurance (collision coverage) covers damage done to your vehicle in an accident.
Medical payment coverage that provides additional money for death or injuries regardless of who’s at fault.
Comprehensive coverage provides funds for damage done to your vehicle that’s not the result of a collision.
Uninsured and underinsured motorist coverage provides you with coverage if an uninsured or underinsured driver causes an accident.
No-fault insurance can be used when it’s determined no one is at fault for an accident.
*If you have an auto loan your lender may require that you have comprehensive and/or collision coverage.
Drivers Must Have Proof of Insurance at All Times
Drivers are required to keep proof of insurance with them any time they’re behind the wheel. Fortunately, this is much easier today since the California Vehicle Code allows for the use of electronic documents on a smartphone for proof of insurance.
To prove insurance exists your documentation must show the:
Car insurance company name
Insurance company address
Period of coverage
Auto insurance policy number
If you’re stopped for a traffic violation or involved in a car accident and you can’t prove you have car insurance the police officer can write you a ticket. Fines are typically in the amount of:
$100 - $200 for the first offense
$200 - $500 for each subsequent offense within 3 years of the first
Those who honestly did have automobile insurance at the time will have to go through the trouble of submitting documentation to the court to get the fine removed.
Requirements If You’re Caught Driving Without Insurance
Drivers who were in fact uninsured at the time they were stopped or involved in a car accident have to face other consequences in addition to fines. Until you show proof of having the state minimum required amount of liability insurance:
The court could impound your vehicle.
Your vehicle registration could be suspended.
Your driver license could be suspended.
An uninsured motorist will also likely be required to carry an SR form. An SR22 is a special document that a person must obtain if their license was suspended for driving without insurance. The document verifies that you do in fact have automobile insurance.
Requirements for California’s Low-Cost Automobile Insurance Program and Discounts
Cheap car insurance can sometimes be difficult to find in California. Your car insurance rate can vary based on a number of factors including the zip code where you live, the car you drive and your driving record. Even age can play a role in how much you pay for auto insurance coverage.
Because coverage is mandated by the state, California has implemented a number of programs to help low-income drivers afford their monthly insurance premiums.
The state also passed Proposition 103 in 1988 to prevent insurance companies from price gouging California drivers. The regulations within Prop 103 influence how rates are determined in California and established the Good Driver Discount Policy.
Good Driver Discount Policy
The Good Driver Discount policy allows many California drivers to get 20% off their auto insurance premiums. To qualify for the discount you must:
Have a valid license for at least three years.
Not receive more than one point on your driving record within the last three years.
Not be involved in an at-fault accident that caused injury or death in the last three years.
Not be found guilty of driving under the influence in the last 10 years.
Not take traffic school for a violation more than once in the last three years.
California Low-Cost Automobile Insurance Program
The California Low-Cost Automobile Insurance Program (CLCA) provides financial assistance for good drivers that meet certain eligibility requirements. If you qualify, the liability insurance minimums are lower. To be eligible for CLCA benefits you must:
Be at least 16 years old.
Have a valid California driver’s license.
Own a car that’s valued at less than $25,000.
Have an annual income that’s less than 250% of the federal poverty level.
Call 1-866-602-8861 for additional information on the current financial requirements.
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*This article was updated on 12/8/2020.