Why It's Important to Understand Car Insurance Requirements in California and How It Could Cost You

Understanding car insurance minimums in CaliforniaCar insurance requirements vary from state to state, so it's important for drivers to understand their obligations. California is a fault state that requires motorists to carry specific minimum amounts of insurance coverage, and authorities impose stiff penalties and fines on those who fail to comply. Motorists with the proper coverage may avoid financial ruin if they're determined to be at fault in an accident. They may also have the knowledge to explore legal options if they're injured in an accident caused by another driver.

What Is the Difference Between No-Fault and Fault Systems?

In no-fault states, motorists injured in car accidents file a claim with their insurance company to seek compensation for medical bills, property damage, and lost income or loss of earning potential—even if another motorist was responsible for causing the accident in question.

In fault system states such as California, car accident victims have far more options when another driver is responsible. They can file a claim with their insurance company; issue a claim with the insurance company of the driver who caused the accident; or file a personal injury lawsuit against the at-fault motorist to pursue compensation for damages.

California Motorist Financial Requirements

California law mandates that all drivers have liability insurance coverage at or exceeding certain amounts. If a driver is at fault for causing an accident, these liability thresholds ensure compensation to other motorists or passengers for medical bills and property damage to their vehicle.  

The California Department of Motor Vehicles (DMV) requires the following amounts for minimum insurance coverage:

  • $15,000 for injury or death to one person
  • $30,000 for injury or death to more than one person
  • $5,000 for damage to property

Drivers with insufficient household income may qualify for California's Low Cost Auto Insurance program. This program has restrictive eligibility requirements, but assists individuals with the purchase of more affordable minimum coverage that meets the state's mandate. 

Many California motorists not only comply with the required minimums, but also purchase additional coverage. In the event they are found to be at fault for an accident, their insurance company will only cover the maximum amount of their policy. Once they've exhausted this coverage, they'll have to pay any remaining damages out-of-pocket. An additional coverage policy provides a safeguard against financial hardship. Also, while liability car insurance is the only type of coverage mandated by California state law, some drivers choose additional plans. Other options include:

  • Comprehensive coverage, which insures motorists against non-traffic-related damages, such as theft.
  • Collision coverage, which insures drivers against damage caused by traffic collisions.
  • Uninsured or underinsured motorist coverage, which insures motorists against damages caused by drivers who don't have insurance, as well as those who have inadequate coverage.

The DMV requires specific financial responsibility requirements for all motorists, but minimum liability insurance is only one option to meet this obligation. For example, instead of purchasing a policy, motorists can:

  • Get a self-insurance certificate from the DMV
  • Deposit $35,000 cash with the DMV
  • Purchase a $35,000 surety bond from a California-licensed issuer

California motorists must show proof of financial responsibility whenever asked by law enforcement or the DMV. Not having an authorized option, or failing to show proof of it, results in penalties and fines.

Fines can be substantial. A first offense carries a penalty of $100, plus the infraction fees and assessments, which may total approximately $450. A second offense within three years carries a fine of $200 to $500, plus additional infraction fees, which may bring the total penalty cost to $2,500.

Law enforcement may also impound the vehicle and hold it until proof of financial responsibility is provided, or suspend the vehicle's registration.

Were You Injured in an Accident?

If you were injured in a car accident, the California fault law permits you to pursue compensation. Your incident may allow a settlement for current and future medical bills related to the accident; property damage to your vehicle; lost wages as a result of the accident; loss of earning potential if those injuries forced you to take a lower-paying position, and even pain and suffering. Complete our contact form to schedule a free consultation with a member of the Inland Empire Law Group to discuss your case. We have offices in Rancho Cucamonga and Victorville, and are proud to serve Fontana and the entire High Desert and Inland Empire region.