Financial Responsibility (Insurance)

Car

Every legal driver is required to have evidence of financial responsibility (insurance). This page discusses disciplinary guidelines and hearing procedures relating to insurance.

Background

California’s insurance laws require that people who own or operate motor vehicles in the state be financially able to provide monetary protection to those injured or having property damaged in vehicle accidents, regardless of fault.

If the driver or owner receives a driving privilege suspension notice because they cannot provide evidence of insurance, they are entitled to a hearing upon request.

Authority

Several sections of the California Vehicle Code (CVC) require drivers to have financial responsibility.

  • CVC §16020 states: “…every driver and every owner of a motor vehicle shall at all times be able to establish financial responsibility pursuant to §16021, and shall at all times carry in the vehicle evidence of the form of financial responsibility in effect for the vehicle.”
  • CVC §16070 provides for suspension of a driver or owner who fails to show financial responsibility was in effect for a reportable accident.
  • CVC §16075 (c) requires that the department hold a hearing and make a determination before the effective date of the suspension.

Reportable Accidents

CVC §16000 (a) requires every driver of a motor vehicle to report an accident to DMV within 10 days if:

  • Any person was injured or killed.
  • The property of either party had over $1,000 in damage.

CVC §16000.1 (a) also requires certain off-highway accidents to be reported if they meet all of the following criteria:

  • Occur off the street or highway.
  • Involve a vehicle subject to registration (includes vehicles not currently registered).
  • Involve damage to the property of any one person over $1,000, an injury of any degree, or the death of any person.

However, an off-highway accident on private property is not required to be reported to DMV if damages occur only to the driver’s property and if no bodily injury or death occurs.

Establishing Financial Responsibility

Under CVC §16021, financial responsibility is established if the driver or owner:

  • Holds a DMV-issued certificate of self-insurance, per CVC §16052.
  • Is covered as an insured or principal under a form of liability insurance policy or surety bond per CVC §16054, which covers the driver for the vehicle involved in the accident.
  • Is the United States of America, this state, any municipality or subdivision thereof, or the lawful agent thereof (owned, leased by, or under the direction of these entities, per CVC §16052).
  • Is a depositor under CVC §16054.2(a).
  • Meets the requirements authorized by DMV in any other way that would make necessary the financial responsibility laws (per Division 7, Chapter 1 of the CVC).

Regardless of which proof of financial responsibility is claimed, the hearing officer must determine whether or not an acceptable form of financial responsibility covering the driver and vehicle was in effect at the time of the accident.

Request for Hearing

To request a financial responsibility hearing, you must submit your request in writing to:

Department of Motor Vehicles
Financial Responsibility Unit
Mail Station J237
PO Box 942884
Sacramento, CA 94284-0884

Failure to respond to a notice of suspension within 10 days of receiving the order is a waiver of the person’s right to a hearing (CVC §16075).

Stays

CVC §16075 (d) states that if DMV does not hold a hearing and make a decision before the effective date of the suspension, it shall grant a stay.

A hearing request does not automatically stay the suspension of a person’s driving privilege. However, if the request is timely and DMV is unable to conduct a hearing and make a decision within 30 days after mailing the order of suspension, the law requires the suspension to be stayed pending the decision.

Fault

Many drivers believe that since the accident was “the other driver’s fault” they should not be suspended. Assignment of fault is not the basis of the proposed action. The action is taken when the driver did not provide evidence of financial responsibility as required by CVC §16020.

Hearing Issues

The issues to be considered in a hearing are limited to:

  • Is the person the driver or the owner of the vehicle involved in the accident?
  • Was there property damage over $1,000, or was any person injured or killed?
  • Did the person have automobile liability insurance (or one of the other approved types of financial responsibility) in effect at the time of the accident?

Who was to blame for the accident or the need for a driver license (DL) has no bearing on the outcome of the hearing.

Suspension of Registered Owner

The driver may believe the registered owner should be responsible and be suspended because the driver had no knowledge of the registered owner not having insurance coverage on the vehicle. The driver’s request in this situation cannot be honored. It is the responsibility of the driver who was involved in the accident to show evidence of financial responsibility. The insurance laws also apply to the registered owner.

The registered owner of the vehicle involved in the accident will have their driving privilege suspended when there is no evidence of financial responsibility under the following conditions:

  • The vehicle was a driverless runaway (CVC  §16001); or
  • The driver cannot be identified.

A financial responsibility action is taken against the driver when the driver is known. If the driver cannot be identified in situations of hit and run, or uses false identification, and the registered owner does not identify the driver, the owner must then submit the required evidence of insurance or their driving privilege will be suspended.

Restrictions and Exemptions

The period of the suspension under CVC §16070 is minimum one year. At the end of the suspension, proof of insurance must be filed and maintained with DMV for three years, per CVC §16430.

Instead of the suspension, a person may apply for a restricted license per the requirements of CVC §§16072 y 16077. A DL suspension or revocation in effect for any cause other than an insurance suspension will prevent the issuance of a restricted license. The restriction remains in effect for the period of suspension and evidence of insurance must be maintained with DMV. After the restriction period ends, proof of insurance must continue to be on file for three years.

A person who is required to drive during employment may apply for a course of employment exemption which allows for the operation of a motor vehicle for compensation not registered in the person’s name in order to perform job duties in the course of employment (CVC §16073). The suspension remains in effect, and the exemption does not authorize driving to and from work.

Any driving other than that permitted by the restriction or exemption is citable under the CVC.

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