California's Compulsory Financial Responsibility
Law requires every driver and every owner of a motor
vehicle to maintain financial responsibility (liability
coverage) at all times. There are four forms of financial
- A motor vehicle liability insurance policy.
- A deposit of $35,000 with DMV.
- A surety bond for $35,000 obtained from a company
licensed to do business in California.
- A DMV issued self-insurance certificate.
You must carry written evidence of
financial responsibility whenever you drive and show
it to a peace officer after a citation stop or accident.
You may have to pay a fine or have your vehicle impounded
if you don't.
If you don't have acceptable financial
responsibility and have an accident, you may lose your
driver license for up to four years.
How Much Insurance
Must You Carry?
State law says you must be financially
responsible for your actions whenever you drive and
for all motor vehicles you own. It is illegal to drive
without being financially responsible. Most drivers
choose to have a liability insurance policy as proof
of financial responsibility. If you have an accident
not covered by your insurance, your driver license will
be suspended. If the driver is not identified, the owner
of the motor vehicle involved will have his or her driver
The minimum amount your insurance*
must cover per accident is:
- $15,000 for a single death or injury.
- $30,000 for death or injury to more than one person.
- $5,000 for property damage.
Before you purchase insurance, make
sure the agent/broker and insurer you select are licensed
by the California Department of Insurance. Call 1-800-927-HELP
to determine the license status and obtain additional
If you are visiting California, or
have just moved here, you should be aware that many
out-of-state insurance companies are not authorized
to do business in California. Before you drive here
you should ask your insurance company if you are covered
in case of an accident. Should you become involved in
an accident in California, all three of the following
conditions must be met to avoid suspension of your driving
- Your liability policy must provide bodily injury
and property damage coverage which equals or exceeds
the limits stated above;
- Your insurance company must file a power of attorney,
allowing the DMV to act as its agent for legal service
in California; and
- You must have insured the vehicle before you came
to California. You cannot renew the out-of-state policy
once the vehicle is registered in California.
Many lawsuits are settled for much
more money than the minimum amounts set by the Financial
Responsibility Law. You may have to pay the extra money
if your insurance doesn't pay it all.
Accident To DMV
When you have an accident, you must
report it to the DMV if:
- More than $750 in damage was done to the property
of any person ($500 for accidents prior to January
- Anyone was injured (no matter how slightly) or killed.
Each driver must make a report to
the DMV. This can also be done by the driver's insurance
agent or broker or legal representative. The CHP or
police will not make this report for you.
You must make this report, whether
you caused the accident or not and even if the accident
occurred on private property. Report the accident
within 10 days. Make the report on the California Traffic
Accident Report form SR 1. You can get this form
from any DMV or CHP office. If you don't make this report
to DMV, your driving privilege will be suspended. If
you did not have the proper insurance coverage, your
driving privilege will be suspended for four years.
During the last three years of the suspension, your
license can be returned if you provide a California
Insurance Proof Certificate (SR 22) and maintain it
during this period.
Accidents On Your
Every accident reported to DMV by law
enforcement shows on your driving record unless the
reporting officer says another person was at fault.
Every accident reported by you, or another party in
the accident, shows on your record if any one person
has over $750 in damage or if anyone is injured or dies
($500 for accidents prior to January 1, 2003). It does
not matter who caused the accident. The law says DMV
must keep this record.
Insurance, and Minors
If you are under 18 years of age, your
parents sign your license application and take responsibility
if you drive any vehicle, minibike, or moped without
a license. Your parents accept liability up to $35,000
for any one accident. This assumption of liability may
be voided if they ask DMV to cancel your license. The
parents' liability automatically ceases when you reach
If you are involved in an accident
you may be liable for civil damages. If the accident
involved a law violation, then you may also be fined.
* Low cost automobile policies are
established for Los Angeles and San Francisco counties.
Please contact your insurance agent
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