California Driver Handbook - Actions That Result in Loss of Driver License
Financial Responsibility
The California 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 responsibility:
- A motor vehicle liability insurance policy.
- A deposit of $35,000 with the 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 police officer after a traffic stop or collision when asked to do so. You may have to pay a fine or have your vehicle impounded if you do not comply with this law.
Insurance
Insurance Requirements
The law states that you must be financially responsible for your actions whenever you drive and for all the motor vehicles you own. Most drivers choose to have a liability insurance policy as proof of financial responsibility. If you have a collision not covered by your insurance, or you do not have insurance, your driver license will be suspended. If the driver is not identified, the owner of the motor vehicle involved in a collision will have his or her driver license suspended.
The minimum amount your insurance* must cover per collision 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. Call 1-800-927-HELP, before you purchase insurance to confirm that your agent/broker and insurer are licensed by the California Department of Insurance.
If you are visiting California or have just moved here, be aware that not all out-of-state insurance companies are authorized to do business in California. Before you drive here, ask your insurance company if you are covered in case of a collision. If you have a collision in California, all three of the following conditions must be met to avoid the suspension of your driving privilege:
- Your liability policy must provide bodily injury and property damage coverage which equals or exceeds the required limits stated in this section.
- Your insurance company must file a power of attorney allowing the DMV to act as its agent for legal service in California.
- You must insure the vehicle before you come to California. You cannot renew the out-ofstate policy, once the vehicle is registered in California.
Collisions On Your Record
The DMV retains information on every collision reported to the DMV by:
- Law enforcement, unless the reporting officer states another person was at fault.
- You or another party involved in the collision, if any one person has over $750 in damage, or if anyone is injured or dies.
It does not matter who caused the collision; the DMV must keep this record.
Collisions, Insurance, and Minors
If you are under 18 years of age, your parent(s) or guardian(s) must sign your driver license application and assume financial responsibility for your driving. When you reach age 18, your parent(s) or guardian(s) liability automatically ends.
If you are involved in a collision, your parent(s) or guardian(s) may be liable for civil damages and you may also be fined.
EXCEPTION: Your parent(s) or guardian(s) can have your driver license cancelled at any time while you are a minor.
* Low cost automobile policies are available in Alameda, Contra Costa, Fresno, Imperial, Kern, Los Angeles, Orange, Riverside, Sacramento, San Bernardino, San Diego, San Francisco, San Joaquin, San Mateo, Santa Clara, and Stanislaus counties. Please contact your insurance agent.
