What is Financial Responsibility?
Financial responsibility is the term used in California to refer to your ability to pay for damages related to a vehicle accident you caused. Most drivers choose automobile insurance as the preferred method of maintaining financial responsibility.
The California Vehicle Code requires all insurance companies to report insurance information for private-use vehicles to the California Department of Motor Vehicles. You must carry proof of financial responsibility in your automobile at all times and provide this evidence to law enforcement officers upon request; when renewing your vehicle registration; and, when your vehicle is involved in a vehicle crash.
What is the Minimum Car Insurance Requirements in California?
Liability insurance compensates accident victims if they cause the accident. California’s minimum liability insurance amounts are:
- $15,000 for the injury or death to one person
- $30,000 for the injury or death to more than one person
- $5,000 for property damage
You have the option of purchasing additional liability insurance in addition to the minimum amounts required by law.
What Is Comprehensive Or Collision Insurance?
In addition to liability insurance, you can purchase comprehensive or collision insurance; however, these types of insurance do not satisfy the financial responsibility requirement to operate a vehicle in California. Comprehensive or collision insurance protects you and your vehicle.
Comprehensive coverage pays for repairs to your vehicle caused by something other than a car accident. Examples include damage from theft, fire, natural disasters, and falling objects. Collision coverage pays for repairs to your vehicle if you are involved in an accident that is your fault.
What Are The Types Of Financial Responsibility Acceptable In California?
In addition to maintaining automobile insurance in an amount equal to or higher than the state limits, drivers may also submit proof of the following types of financial responsibility to satisfy the requirement.
- A driver may place a cash deposit in the amount of $35,000 with the California Department of motor vehicles;
- Obtain a DMV-issued self-insurance certificate; or,
- Obtain a surety bond in the amount of $35,000 from a company licensed to do business in California.
What Are The Penalties For Failure To Maintain Automobile Insurance?
If you fail to maintain insurance or another acceptable form of financial responsibility, your vehicle registration will be suspended. The penalties for driving without insurance potentially include suspension of your driver’s license and a fine.
Accidents Involving Uninsured Motorists
Even though California requires all drivers to maintain an acceptable form of financial responsibility, many drivers on the road do not have insurance. However, if you are involved in an accident caused by an uninsured driver, you may still be able to recover damages from your insurance company under an uninsured motorist policy.
Discuss Automobile Insurance with Your Insurance Agency
Purchasing and maintaining automobile insurance in the amounts and types to protect yourself is vital. You should discuss the various types of automobile insurance available for purchase with your insurance agent, including the benefits and advantages of each type of coverage.
If you are involved in a car accident do not hesitate to contact the experienced car accident attorneys at Drake Law Firm. Call our office today.