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California car insurance laws

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Car insurance is a legal requirement for drivers in California. The state requires at least a minimum amount of coverage for liability and foregoing coverage completely could result in fines, license suspension and other serious consequences. Before purchasing auto insurance in the Golden State, it can be helpful to understand what these requirements are and the additional options you can include in your coverage to protect your finances while behind the wheel.

Car insurance laws in California

California car insurance laws are very straightforward. Drivers must carry a certain amount of financial responsibility of their choosing, within state regulations, and they must keep proof of insurance in their vehicle. When requested by a police officer, drivers are legally required to show proof of insurance. Here is the list of car insurance laws in California:

  • Drivers must carry financial responsibility for every vehicle they own. Acceptable forms of financial responsibility include car insurance, a cash deposit of $35,000 with the DMV, a DMV-issued self-insurance certificate or a $35,000 surety bond from a company licensed to do business in California.
  • Drivers must carry proof of insurance in their vehicle at all times.
  • Drivers must show proof of insurance when requested by law enforcement, after an accident and when renewing the car’s registration at the DMV.
  • Insurance companies in California are legally required to report private passenger car insurance information to the DMV.
  • California auto insurance carriers are not permitted to consider credit, gender and ZIP code as ratings factors.

Liability insurance in California

Most California drivers purchase an auto insurance policy to fulfill their financial responsibility requirement. Per state law, all drivers must carry at least the minimum coverage amount for liability insurance to financially protect themselves and other drivers on the road, which includes the following:

  • $15,000 in bodily injury liability coverage per person
  • $30,000 in bodily injury liability coverage per accident
  • $5,000 in property damage liability coverage per accident
  • Uninsured and underinsured motorist coverages must be offered, but can be declined

There are two limits for bodily injury liability: per person and per accident. These designations refer to how much money will be paid according to the situations. For example, if a driver with the state’s minimum liability requirements is at-fault in an accident, their insurance company would pay each person in the other involved vehicle up to $15,000 for expenses related to bodily injury liability, such as medical bills, long-term care costs, and lost earnings. However, the total of these expenses for the accident cannot exceed $30,000. Anything above this limit would be the driver’s responsibility to pay out-of-pocket.

There is no guarantee that California’s minimum liability requirements will be enough to cover the full cost of an at-fault accident. Most insurance professionals recommend that drivers purchase more liability coverage beyond what is legally required and purchase additional coverage to better financially protect themselves. Full coverage car insurance includes both comprehensive and collision coverage, which covers physical damage to your vehicle, and could also include California’s optional uninsured and underinsured motorist coverage offerings. Collision coverage covers your vehicle if it is damaged during an accident, while comprehensive coverage covers other perils like theft, weather and falling objects.

Is California a no-fault state?

No, California is not considered a no-fault state. In no-fault states, a driver’s insurance company covers the cost of their medical expenses and lost wages after an accident, regardless of who caused the accident. In an at-fault state like California, the at-fault driver’s insurance company is responsible for compensating the other driver for the related liability expenses.

Penalties for driving without insurance in California

California law states that drivers who do not carry the minimum amount of liability insurance are subject to penalties. Here are some of the punishments that Californians can face for driving without insurance or financial responsibility in the state:

  • If you are found to be driving without proof of insurance, you will typically receive a ticket, pay a fine and appear in court.
  • If you are found driving without insurance, your license may be suspended and your vehicle could be impounded.
  • If the DMV does not receive proof of insurance for your newly registered vehicle, the registration is automatically suspended.

Additional auto insurance coverage options in California

In addition to liability insurance, California drivers can choose to purchase other coverages for more protection. Buying more coverage raises the premium, but it reduces the need to pay out-of-pocket in certain situations. Here are the additional auto insurance coverage options available in California:

  • Medical payments: This pays for medical bills up to the coverage limit for you and any other passengers in your vehicle in the event of an accident, regardless of who was at-fault.
  • Uninsured and underinsured motorist insurance: If you are involved in an accident caused by a driver who does not have insurance or enough insurance to cover the losses, these coverage types could kick in to pay for your medical bills and lost wages. Uninsured motorist coverage may even cover property damage to your vehicle caused by a driver in a hit-and-run.
  • Gap insurance: Drivers who have a lease or loan should consider purchasing gap insurance. After an accident, it covers the difference between a new car’s depreciated value and the remaining loan balance on the vehicle.
  • Roadside assistance: Roadside assistance covers basic vehicle repairs, towing, extrication, refueling and battery services if the car breaks down.
  • Rental car coverage: If you were involved in an accident and your vehicle is at the repair shop, this can cover the expense of a rental car up to a certain dollar amount per day for a set period of time.

Frequently asked questions

What is the best car insurance company in California?

There are dozens of car insurance companies in California, but the best car insurance for each driver will depend on their needs. Bankrate researched dozens of insurance companies based on customer reviews, options such as collision and comprehensive coverage, discounts and pricing to determine the best car insurance companies in California. When conducting your car insurance research, it helps to gather multiple customer service and financial strength ratings to gain a better understanding of an insurer’s reliability and customer service.

What is the cheapest car insurance company in California?

Most drivers look for affordable rates when shopping for car insurance. Every driver pays a slightly different price, but some providers offer cheaper rates than others. Rates will also be affected by the additional options included in the auto policy, like collision coverage and comprehensive coverage, medical payments and more. To find the cheapest car insurance in California, consider your budget and insurance needs to compare each company by the same pricing criteria.

How much does car insurance cost in California?

In California, the average driver pays around $733 per year for minimum coverage car insurance and $2,065 per year for full coverage. By comparison, the national average rate is $1,674 per year for full coverage. However, car insurance premiums are personalized. Insurance companies look at different factors to calculate a driver’s premium, including your age, vehicle type and claims history. In California, your ZIP code, gender and credit score cannot be used to determine your car insurance rates.

How can I lower the cost of my car insurance?

California drivers have several options for lowering their car insurance premium. Some car insurance companies offer discounts for being claims-free, taking a defensive driving course, paying the annual premium in full, bundling policies and insuring multiple vehicles. Raising your deductible and driving less frequently may also result in a lower premium.

Written by
Elizabeth Rivelli
Insurance Contributor
Elizabeth Rivelli is a contributing insurance writer for Bankrate and has years of experience writing for insurance domains such as The Simple Dollar, Coverage.com and NextAdvisor, among others
Edited by
Insurance Editor