California Car Insurance Laws & State Minimum Coverage Limits

California State FlagTo get behind the wheel legally on California roads, drivers are required by law to carry proof of financial responsibility. For most people, that means carrying an insurance policy that meets the legal minimum for liability coverage. In California, the DMV ensures responsibility by keeping track of insurance policies via an electronic reporting system.

Required Car Insurance Coverage

California law states that all drivers must carry an insurance policy that provides bodily injury coverage in the amount of $15,000 per person and $30,000 per incident, and $5000 for property damage. Drivers can also choose to provide for financial responsibility by making a deposit of $35,000 either in a surety bond or with the DMV, obtaining a self-insurance certificate from the DMV. The majority of drivers carry a liability insurance policy with higher limits than the legal minimum.

  • Bodily Injury Coverage – The minimum legal coverage of 15/30 will pay out a total of $15,000 to any single person who is injured in an accident for which you are found at fault, and will pay out a total of $30,000 for injuries to multiple people.
  • Property Damage – With a property damage policy at the legal minimum, drivers will have a limit of $5000 to pay for property damage in an at-fault accident. This includes damage to another vehicle or to other private or public property.
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Optional Insurance Coverage

In addition to increasing liability limits above the legal minimum, California drivers can select a variety of other coverage options. Policies that include comprehensive and collision coverage in addition to liability are considered to be full coverage policies, but there are many more options available.

Collision – In the event that you are found to be at fault in an accident, collision coverage will pay for the damage to your vehicle. Without this coverage on your policy, you will have to pay for your own repairs out of pocket. A deductible, which you can select, will apply to this coverage.

Comprehensive – This coverage pays for damage or loss that results from anything that is not a collision. This includes weather damage, theft, and vandalism. A deductible will apply to this coverage as well.

Uninsured/Underinsured Motorist – This optional coverage pays for damages caused by another driver who either has no insurance or whose limits are too low to cover the entire cost of repairs.

Medical Payments – This pays for extra medical expenses for you or any passenger in your vehicle that are not covered elsewhere. It can also be used to pay funeral expenses.

Rental Reimbursement – Adding this coverage to your insurance policy will provide for the use of a rental car while your car is being repaired under a covered loss.

Towing and Roadside Assistance – This will pay for roadside emergency needs including towing services, jump-starts, flat tire assistance, and even locking your keys in the car.

Other Coverage – There are a number of other coverage options that can be added to a California auto insurance policy. They may vary from company to company, and may not apply to all policies.

Providing Proof of Financial Responsibility

There are a number of situations in which you may be asked to provide proof of financial responsibility in the form of an insurance card or other DMV-issued document, in the case of a bond or self-insurance. Even though insurance is reported electronically to the DMV, you must still carry physical proof and present it in these situations:

  • When a police officer asks you to present proof
  • When you have been involved in an accident
  • When you are registering or renewing the registration for a vehicle

If you fail to present proof upon request, you may be subject to penalties. For a first offense, you will receive a fine of $100-$200. Second offenses earn greater penalties of $200-$500 fines.

A driver who is involved in an at-fault accident while uninsured may face steeper penalties, including driver’s license suspension, vehicle impoundment, and even the possibility of jail time. As an uninsured driver, you will also be held responsible for damages or injuries and can be sued.

If you are involved in an accident without insurance, you will likely be required to file an SR-22 (California Insurance Proof Certificate) with the DMV. This document is sent by your insurance company to prove that you have insurance, and if at any time your insurance is cancelled or lapses, the insurance company will notify the DMV. SR-22 drivers may face penalties including suspension of driving privileges if their insurance lapses.

Insurance For Teen Drivers in California

As soon as a teenager receives a driver’s license, he or she must meet financial responsibility requirements. Parents are required to provide liability insurance meeting the legal minimum for their children under the age of 18.

California uses a graduated licensing system similar to that used in most states, and the DMV sets out rules and restrictions for obtaining a license. At 15 ½ years old a teen can take the written test to obtain a permit, allowing them to begin the process of learning to drive. During this time the teen driver may not drive unless there is a licensed adult in the passenger seat.

In order to take the road test for a provisional license, a teen driver must be at least 16 years of age and meet these requirements:

  • Hold a permit for at least 6 months
  • Complete a driver education course
  • Complete 6 hours of approved driver training
  • Complete a total of 50 hours of practice time between the wheel with a licensed adult driver, 10 of which must be at night

Once a teen driver passes the road test, they are granted a provisional license. At this point, the driver must be named on an insurance policy meeting the legal minimums. Parents or guardians will be asked to sign the application for a license stating that they will provide this coverage. The provisional license carries a few restrictions for the first 12 months:

  • The teen driver can’t carry passengers under 20 years old unless there is a licensed driver over 25 in the car.
  • The teen can’t drive between the hours of 11 pm and 5 am unless it is for work or school, or in an emergency situation.
  • The driver may not use any sort of wireless device while driving.

At the age of 18 the provisional period will end; at this point the teen driver can remain on the parent or guardian’s insurance policy or seek their own insurance. A teen can remain on the parent’s policy even when they are away at school, but once they have moved away from home permanently, they should purchase a policy.

Shopping For Car Insurance In California

California ranks among the top ten most expensive states for auto insurance, ranking at #8 for 2014 according to Insure.com. With an average annual rate of $1962, auto insurance can be very expensive for Californians. California has laws in place to help make car insurance affordable. In California, it is illegal for an insurance company to use credit history as a factor in determining rates, unlike many other states. There are several factors that will weigh greatly in calculating premiums:

  • Driving record
  • Age and years of driving experience
  • Where you live and where you work
  • How far and how often you drive
  • The type of car you drive

Low-cost auto insurance is available to Californians who qualify through a special program, the California Low Cost Auto Insurance Program. In order to qualify applicants must have a good driving record and meet income requirements.

The California Department of Insurance monitors auto insurance in California, and responds to complaints or concerns regarding the hundreds of companies selling insurance products in the state. Their website assists Californians shopping for insurance with a searchable database of insurance company profiles as well as information on coverage requirements and how much insurance you should carry.

High Risk Driver Insurance

High-risk drivers who have had tickets or accidents, or do not qualify for a standard policy for other reasons may have difficulty finding insurance. There are a number of companies that cater to high-risk drivers, although their policies may be more costly. The California Low Cost Auto Insurance Program does not offer policies to high-risk drivers.

Drivers who are unable to qualify for a policy through an insurance company can apply to the California Automobile Assigned Risk Plan (CAARP) for help with getting a policy. This plan works by assigning high-risk drivers to an insurance company, which is required by law to accept CAARP drivers when they are assigned. Every auto insurance company in the state must participate in the plan. This allows the risk to be spread among multiple companies.

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