California Driver Handbook
Actions That Result in Loss of License - Financial Responsibility - Insurance
Financial Responsibility
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 responsibility:
- 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 you must 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.
Insurance
Insurance Requirements
The law states you must be financially responsible for your actions whenever you drive and for all motor vehicles you own. Most drivers choose to have a liability insurance policy as proof of financial responsibility. If you have an accident not covered by your insurance or you have no 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 license suspended.
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.
Call 1-800-927-HELP before you purchase insurance to make sure 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 many out-of-state insurance companies are not authorized to do business in California. Before you drive here, ask your insurance company if you are covered in case of an accident. If you have an accident in California, all three of the following conditions must be met to avoid suspension of your driving privilege:
- 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.
Accidents On Your Record
Every accident reported to DMV by:
- Law enforcement shows on your driving record unless the reporting officer says another person was at fault.
- 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.
It does not matter who caused the accident, DMV must keep this record.
Accidents, Insurance, and Minors
If you are under 18 years of age, your parents sign your license application and assume financial responsibility for your driving unless they ask DMV to cancel your license. When you reach age 18, your parents’ liability automatically ends.
If you are involved in an accident you may be liable for civil damages and you may also be fined.
*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 Stainslaus counties. Please contact your insurance agent.