The Simple Meaning of the Liability Insurance Law
In California, the law requires every motor vehicle to be properly insured. Such insurance must cover financial liability for costs you may face if your vehicle is involved in a collision.
This is When You Need to Show Proof of Liability Insurance
You must carry evidence of insurance in your vehicle at all times. It must be shown when:
- Requested by law enforcement.
- Renewing vehicle registration.
- The vehicle is involved in a traffic collision.
You must also show proof of insurance when taking the DMV road test.
What Are the Minimum Requirements?
A liability insurance means you are financially responsible for your actions whenever you drive and for all the motor vehicles you own. The insurance compensates a person other than yourself for injury, death or property damage. A comprehensive or collision insurance does not meet vehicle financial responsibility requirements.
The minimum requirements for private passenger vehicles are:
- $15,000 for injury/death to one person.
- $30,000 for injury/death to more than one person.
- $5,000 for damage to property.
What Types of Financial Responsibility are There?
Most drivers buy a liability insurance from an insurance company like Allstate, Geico, Progressive or State Farm. But there are four different ways to meet the requirements of the law:
- Motor vehicle liability insurance policy.
- Cash deposit of $35,000 with DMV.
- DMV-issued self-insurance certificate.
- Surety bond for $35,000 from a company licensed to do business in California.
For information regarding cash deposits or self-insurance, contact the DMV Financial Responsibility Unit.
To locate a company that issues surety bonds, contact the Department of Insurance at www.insurance.ca.gov
What Happens if Don’t Carry Vehicle Insurance?
The first time you are caught without a valid insurance, the court will fine you up to $200.
A second offense will result in a fine up to $500. In addition, the court may decide – for a good reason – to impound your vehicle. You will not get your vehicle back until get an insurance and pay all fines, towing and storage fees.
If you are involved in accident and don’t have an insurance, consequences are more severe. It doesn’t matter if you caused the accident or not. Your license will be suspended up to four years. To get your license reinstated, you must provide a costly SR-22 Proof of Financial Responsibility certificate from your insurance company and pay all reinstatement fees.
A police officer at the scene may order your car impounded. You will not get your vehicle back until you clear all outstanding fines and fees.
If you are not at fault, you pay the medical fees for your injuries, damages to your car, and any court fees. No insurance company will help you.
If you are at fault, you will also pay all medical costs for injuries to anyone involved, including yourself. You are also responsible for damages to all vehicles, street fixtures, and other private property. If other drivers involved carry uninsured motorist coverage, their insurance company will compensate them for their losses. Then, the insurance company will come after you to cover their costs, which means you can lose your car and your home.
When Is a Vehicle Registration Suspended?
Failure to carry insurance may result in a suspension of your vehicle registration. This happens when:
- DMV is notified that an insurance policy has been cancelled and a replacement policy is not submitted within 45 days.
- Insurance information is not submitted to DMV within 30 days of issuance of a registration card upon initial registration or transfer of ownership.
- The registration is obtained by providing false evidence of insurance.
What to Do When You Need to Cancel Your Insurance
If you decide not to drive your insured vehicle and don’t have it parked on a California roadway, you should notify DMV before you cancel your insurance. To prevent a vehicle registration suspension, submit an Affidavit of Non-Use (ANU) (REG 5090) form to DMV online at www.dmv.ca.gov. Then, contact your insurance company.
Things to Remember for Your California DMV Written Test
- You must carry evidence of insurance in your vehicle at all times.
- It must be shown when you are asked by a peace officer to do so.
- You must show it to other drivers when you have an accident.
- You may have to pay a fine or have your vehicle impounded if you do not comply with this law.
- If you are involved in a collision and don’t have insurance, your license will be suspended.