Auto Insurance Requirements for the State Of California

California laws require that all insurance companies must electronically report private-use vehicle information to the department of motor vehicles on a regular basis. Law enforcement as well as court personnel have access to these records through the DMV, and have control over a license status as well. This is all due to changes to laws that occurred in 2006 that were designed to ensure that every licensed driver in California maintained the minimum of liability insurance on their vehicle. Liability insurance provides financial responsibility for property damage, bodily injury or death caused by a traffic collision regardless of fault and insures that uninsured vehicles are not being driven.

Mandatory requirement and how to comply with them

There are mandatory requirements that the state of California enforces involving financial responsibility insurance on a vehicle. Every licensed driver and every registered vehicle must have at the least financial responsibility insurance if it is parked or driven on any road in the state. You also must carry proof of financial responsibility insurance in your vehicle at all times and be able to present it when requested by a police officer, when renewing your registration, when the vehicle is involved in a collision or to prove that you have financial responsibility for any other reason. The DMV also maintains a list of other documents that you may need in addition to your proof of financial responsibility if there is a need for them. Some of these documents include a document or ID card from your personal insurance company, an SR-22 certificate or proof of deposit with the DMV if you are self-insured. There are also minimum dollar amounts that must be maintained for financial responsibility which are $15,000 for injury or death of one person, $30,000 for injury or death to more than one person and $5,000 for property damage. Liability insurance only covers injury, death or property damage to the other party involved, not to the insured, so it is important that you carry enough coverage to insure they are covered fully in case of an accident.

If you choose not to go through an insurance company to get a financial responsibility or liability policy, the DMV allows the option of depositing money with them to cover you, or a surety bond issued by another company. If you so choose, you can deposit $35,000 cash with the DMV and be considered self-insured. If you are in an accident, the $35,000 will be dispersed to cover payment for injury, death or property damage to the other party if you are involved in an accident. Keep in mind, you will have to replace the amount that is dispersed, and if the amount ends up being more than $35,000, you may be sued for the balance. You also have the option of providing the DMV with a security bond for $35,000 issued by a legitimate business in the state of California. In the event you are in an accident, the bond company will disperse the amount of the damages to the other party, and again you will need to replace the amount, or be held responsible for any amounts over the $35,000.

Consequences of not complying with mandatory insurance laws

Just getting financial responsibility or liability insurance is just the start, in order to comply with laws you need to maintain that insurance as well. If you let your insurance lapse and do not renew it and provide proof to the DMV within 45 days, you are subject to having your license suspended without notice. Within 30 days of purchasing a new vehicle, you must provide proof of financial responsibility or liability to the DMV or again, they can suspend your license. If the vehicle registration is obtained, through provided false insurance documents, your registration can be suspended and if the vehicle registration is suspended, you are also subject to having your driver’s license suspended as well. It is very costly to have your registration and license reinstated. It can also cause your future insurance premiums to go up and require that you maintain another policy known as an SR-22 on top of your regular insurance. If you are involved in a collision and found to have no insurance, you risk having your vehicle impounded, your license and registration suspended and you will be held personally liable for any injuries, death or property damage that occurs.

Driving without insurance is not only a bad idea, but illegal in California as well. California has designed its insurance laws to make the roads safer and hold each person with a driver’s license responsible for their driving. For the small amount of money you may not have to pay not having insurance, there are large sums of money you will have to pay if you are caught or involved in an accident. You also run the risk of losing your driver’s license altogether. Having insurance not only makes the roads safer for you but for others as well, so in the end it is cheaper to pay your premium, and then pay for an accident.