What are the Basic California Auto Insurance Requirements?

Posted on: 11Feb,2016

As with any other state in the US, California law requires that you carry a minimum amount of liability coverage in order to drive legally on the state’s highways and roads. From a legal standpoint, insurance is commonly referred to as financial responsibility and it is required whenever you are driving a vehicle as well as when it is parked on any roadway. As a result, all licensed drivers in California are required to carry evidence of their financial responsibility which is more commonly known as proof of insurance.

Meeting Financial Responsibility Requirements

Your proof of insurance must be carried with you at all times and must be provided when:

• Any law enforcement officer requests that you show it to them
• You are renewing your vehicle’s registration through the Department of Motor Vehicles
• Your vehicle is in an accident

Furthermore, California Vehicle Code (CVC) §16058 requires every insurance company in the state to electronically report insurance information regarding private-use vehicles to the Department of Motor Vehicles (DMV). However, if the vehicle is covered by business or commercial vehicle insurance, the insurer does not have to report it to the DMV.

Additionally, in 2006, there were specific changes made to the electronic reporting of insurance information as well as the programming of it. These changes enabled the DMV to monitor a driver’s insurance coverage and take the necessary appropriate actions required by law where vehicle suspension is concerned. Court personnel and law enforcement are also given electronic access the DMV’s records regarding insurance status of every licensed driver in the state.

California Minimum Liability Requirements

The state’s minimum liability insurance requirements for all private-use passenger vehicles is covered under California Insurance Code §11580.1b. It requires that every licensed driver carry the following liability limits:

• $15,000 per death of or injury to a single individual
• $30,000 per death of or injury to more than one individual
• $5,000 for property damages

Liability coverage will compensate anyone other than the auto insurance policy holder for personal injuries and any property damages that occur as a result of an accident. Coverages such as collision and comprehensive does not meet (or prove) your financial responsibility requirements.

Failure to Carry Auto Insurance and Ignoring the Law

Taking the above information into consideration, the most common way to comply with California’s financial responsibility requirement is by purchasing liability coverage from an auto insurance company. Your license could be suspended if you are involved in an auto accident and you do not have minimum liability coverage. Remember, the financial responsibility law requires you to present proof of your insurance coverage whenever you are asked to do so, regardless of who is driving the vehicle at the time it’s requested.

It’s also important to remember that driving is not a right, it’s a privilege. Driving in California without minimum liability coverage is against the law and you could be fined and/or have your license suspended if you cannot show proof of insurance. If an officer of the law pulls you over and you cannot provide proof of insurance when asked for it, you could be issued a traffic citation as a result. By showing your proof of insurance when you go to court over the citation, you can have it nullified. However, you may have to pay court administrative fees and other related costs.

Comparison Shopping is a Necessity

Under the premium rating laws of California, auto insurance companies are allowed to determine its own premium rates based on several factors including their past experience with expenses and losses. Since the experiences of each company usually differ, even when they are located in the same geographical region, their premium rates will vary as well. That way, you can shop around to find the best coverage value for the money.

By searching online, you can save time and money when deciding on the insurer that best facilitates your coverage needs. Just remember that you want to get several quotes and not always settle on the cheapest coverage. Additionally, keep in mind that choosing an insurance agent is just as important as choosing an accountant, attorney, or doctor. So you want to be as thorough as possible when doing your research.