Auto Insurance Requirements in California

Auto Insurance Requirements in California

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The state of California mandates that all vehicles registered in the state carry a minimum level of financial responsibility or auto insurance. These requirements are generally implemented to provide for other people's medical and financial expenses in the event you cause an accident. Depending on the driver’s use of the vehicle and the driver’s circumstance, alternate forms of proof of your ability to pay may be available.

To prove that you do carry sufficient liability insurance, you will need to present your insurance ID card, which lists information such as the insured vehicle, named policyholder, as well as the policy start and end dates. If a driver is ever found to be without sufficient evidence while he or she is operating a car on the road, this may lead to suspension of the driver’s license or vehicle registration, on top of possible fines.

California Car Insurance Requirements & Minimums

The most common and recommended way to satisfy the requirement is to purchase an auto insurance policy with a licensed insurer. Below are the least coverage and lowest limits available from auto insurance companies in California.

California Required Car Insurance Coverage

CA Required Min. Limits
Bodily Injury (BI) Liability Insurance$15,000 per person / $30,000 per accident
Property Damage (PD) Liability Insurance$5,000 per accident

While the two coverages above are the minimums required by law, there are a couple of other optional types that will be useful to have on your policy. Below is a description of several options available to Californian drivers.

  • Bodily Injury Liability Insurance: This type of coverage from your insurance company pays for any injuries you caused in an accident that is deemed your fault. It covers medical expenses for the driver or passengers in the other car, and not your own. California car insurance laws mandate that you have bodily injury coverage of at least $15,000 per person, and up to $30,000 per accident
  • Property Damage Liability Insurance: $5,000 per accident that pays for other people's property and loss of use that you damaged in an accident you caused
  • Comprehensive and Collision (optional): pays for repairs to your own car when it gets damaged in an accident or stolen
  • Uninsured / Underinsured Motorists (optional): in most situations, you file a claim with the other person's auto insurance company for damages their policyholder caused. When it's with an uninsured or underinsured motorist, however, you have zero or limited recourse to get your expenses reimbursed. Nearly 15% of claims in California are due to uninsured motorists, which is the 14th highest rate in the nation - that's why uninsured motorist coverage is recommended. Insurers typically offer three types of uninsured/underinsured motorist coverage: Uninsured Motorist Bodily Injury, Underinsured Motorist Bodily Injury, or Uninsured Motorist Property Damage
  • Medical Payments (optional): Also known as Med Pay, your auto insurance company will pay for reasonable and necessary medical bills you or your passengers have from an accident (regardless of who is at fault). Coverage typically goes in increments of thousands, and usually starts at $1,000 per person

CLCA Program Policy

There is one exception to the minimum liability coverage limits listed above, and that is when the driver gets a policy through California’s Low Cost Auto Insurance program. The CLCA program aims to provide affordable car insurance for safe drivers whose household income falls within federal poverty guidelines. There are restrictive income eligibility and other requirements, but drivers who meet them can purchase auto insurance at limits lower than the standard minimums, and still satisfy California auto insurance laws.

  • Bodily Injury Liability Insurance: $10,000 per person / $20,000 per accident. These limits, which pay out claims other people make in an accident you are at fault for, are $5,000 less per person compared to a standard policy in California
  • Property Damage Liability Insurance: up to $3,000 per accident
  • Uninsured Motorist BI: optional. Up to $10,000 per person / $20,000 per accident. For an additional premium per year, CLCA policyholders can add coverage to protect themselves against uninsured drivers. In these cases, the CLCA insurer will step in to reimburse their own customer for medical expenses and other bodily injury claims
  • Medical Payments: optional. Up to $1,000 per person

Other Types of Financial Responsibility

Apart from an auto insurance policy, there are three other acceptable forms that can prove you're financially responsible. However, not every alternative is available to all drivers.

Cash Deposits of $35,000 with DMV: to opt for a cash deposit, you must first open a savings account – it can be any bank of your choice. Then you must contact the DMV Financial Responsibility Unit (telephone number: (916) 657-6520) to give you an application form, which will contain two parts: one with your information and the other a verification from the bank of your cash deposit account. After your application is accepted, you have to make sure that there is always at least $35,000 in the account, which DMV will have access to in the event of motor vehicle accident.

Certificate of Self-Insurance from DMV: the California DMV can issue a self-insurance certificate to an applicant who has more than 25 vehicles under his or her name and is able to – and will likely continue to be able to – pay judgments against him or her in amounts at least equal to the liability limits set by state (15/30/5). The department may require applicants to submit evidence of financial ability prior to issuance.

Surety Bond for $35,000 from a California licensed surety company: usually an alternative for commercial insurance, surety bonds are issued as a form of guarantee that the insured driver (the principal) will be liable for any damages or expenses he or she may incur when an accident happens, and the surety company will step in to pay when the principal cannot produce the funds. Contact the California Department of Insurance for a list of licensed surety companies in California that offers this type of bond.

Mark is a Senior Research Analyst for ValuePenguin focusing on the insurance industry, primarily auto insurance. He previously worked in financial risk management at State Street Corporation.

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