No vehicle can be driven on California roadways without financial responsibility coverage. There are four ways to get financial responsibility coverage.

1.Buy auto insurance that meets California’s minimum liability requirements.

2.Make a $35,000 cash deposit with the Department of Motor Vehicles (DMV).

3.Get a Certificate of Self Insurance from the DMV. This can be issued to owners of fleets with more than 25 vehicles.

4.Get a surety bond from an insurance company licensed to do business in California.

The majority of California’s drivers purchase auto liability insurance coverage. In California drivers are required to buy liability insurance that meets the statutory minimum requirements.

The minimum requirements are:

• - $15,000 for injury/death to one person.
• - $30,000 for injury/death to more than one person.
• - $5,000 for damage to property.

Liability Insurance

Auto liability insurance in California is designed to protect others if you are in an accident in which you are at fault. Your liability insurance will pay for the accident victims medical bills, property damage and lost wages. It is important to get adequate liability insurance because if damages exceed the minimum coverage amounts you will be liable for any excess expenses. If you are found to be at fault in a serious automobile accident, expenses could easily exceed the minimum coverage amounts. Many experts advise their clients to get at least $500,000 in liability coverage.

Proof of Insurance

In 2006, the Department of Motor Vehicles began verifying auto insurance for privately owned vehicles. Changes were made to make sure that all vehicles on California’s roads have liability insurance. Insurance companies in California must now electronically report auto insurance information on privately owned vehicles. If the Department of Motor Vehicles finds that a vehicle is not insured, the vehicle's registration will be suspended.

You must keep proof of financial responsibility available at all times. Driver’s can be required to provide proof of insurance in the following situations:

- When purchasing or renewing your vehicles registration.
- When the vehicle is involved in a traffic accident
- When it is requested by a law enforcement officer
- It should be noted that law enforcement officers and court officials also have access to an autos insurance status through DMV records.

Penalties for Uninsured Motorist

The Department of Motor Vehicle in California monitors registered vehicles to determine if they have auto liability insurance. If the DMV receives information from your insurance company that your policy has lapsed, you will be given 45 days to provide proof that you have purchased a new insurance policy. If you cannot provide proof of insurance within 45 days, your registration will be suspended for one year.

If you are involved in a traffic stop, and cannot provide proof of insurance, you can be fined $500, have your driver’s license suspended, plus have your vehicle impounded. You will also be responsible for the vehicles towing expense and storage fees.

Collision Coverage

Collision auto insurance is not required by the state of California. However if, you have a loan on your car or lease your car the lien holder may require you to buy it. Collision coverage pays for repairs to your car if it is in an accident with another vehicle or object. Collision insurance coverage will pay for repairs to your auto in excess of your deductible regardless of who causes the accident up to your policies limits. If you purchase collision insurance, you should remember that if you make a claim, the insurance company will not settle for more than the book value of your car. You therefore, do not want to carry too much collision coverage.

Comprehensive Insurance

Comprehensive insurance like collision insurance is not required by the state of California. However if, you have a loan on your car or lease your car the lien holder may require you to buy it. Comprehensive auto insurance covers theft, fire, vandalism, storms and acts of God. If you purchase comprehensive insurance, you should remember that your insurance company will not settle for more than the book value of the car. You should consider this when you decide the amount of coverage that you want to buy.

SR-22 Coverage

If you are deemed to be a high-risk driver, and have to get SR22 coverage that is unfortunate. If you had to get SR 22 coverage that usually means that you have been convicted of driving under the influence (DUI), were caught driving without auto insurance, or had an accident and were unable to pay for the damages. If you want to get your driver’s license reinstated, you will have to get an SR 22 form from the DMV. In order to meet the SR 22 requirements, you will need to purchase insurance from an SR 22 insurance provider. The insurance provider will then send the SR 22 application to the DMV, to verify that you are insured, and have met the state’s financial responsibility requirements. If the DMV accepts the SR 22 application, it will send the acceptance letter in about 30 days. Drivers must maintain SR 22 coverage for 3 years.

Rental Cars

In the State of California, every vehicle must be insured. This includes rental cars. In many cases, your personal auto insurance will cover the rental car. If your personal insurance does not cover the rental car, check to see if your credit card company covers rental insurance. If either your personal insurance or your credit card company covers the rental insurance, you will have to purchase the minimum liability coverage from the rental company. A copy of the final agreement outlining the coverage must be carried in the vehicle at all times.

Reducing Your Insurance Cost

Since you are required to purchase auto insurance in California, you will want to take steps to hold down the cost of your auto insurance. Here are a couple of ideas.

Deductibles: Most California car insurance policies set your accident deductible at $500.00. If you have your insurer raise the deductible, your insurance cost will go down.

Discounts: It is important to inquire about discount when you shop for insurance. Discounts like the Safe driver's discount or multiple car discounts can significantly reduce your insurance cost.

Duplicate Coverage

Avoid duplicate coverage’s. If you already have health insurance, make sure to exclude medical coverage from your car insurance in California.

Collision Coverage

If you have an older car, you should think about dropping your collision coverage. You should determine the cars book value and how much of your insurance premium is for collision coverage. You might find that you are better off keeping the money that you are paying for collision insurance if your car is not very valuable.

If you study you insurance policy, you will probably find other ways to reduce your insurance cost.

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