Auto Insurance in California

While driving in the Golden State, you’re legally required to prove financial ability to pay for damages or injury in the event of an automobile accident. You can prove this in one of four ways:

  1. A California vehicle liability insurance policy
  2. A $35,000 cash deposit with the Department of Motor Vehicles (DMV)
  3. A $35,000 surety bond (company must be California approved)
  4. A DMV issued self-insurance certificate

The California Compulsory Financial Responsibility Law

Unlike “No Fault” states, California requires drivers to carry policies that will cover compensation for damages and/or injuries to others. According to the California Driver Handbook, this law states that every motorist and every vehicle owner will be held financially responsible for their actions.

In California, the required minimum limits of liability insurance are:

Bodily Injury

  • $15,000 for single death or injury.
  • $30,000 for two or more people injured. ($30,000 is the maximum limit for death or injury to more than one person in any one accident.)

Property Damage

  • $5,000 property damage for any one accident.

Penalties for inability to prove coverage

You must carry written evidence of financial responsibility at all times when driving. Failure to comply with this law may result in a fine or having your vehicle impounded.

According to the State of California’s Department of Insurance, if you are stopped by a law enforcement official, you may receive a citation if you can’t show proof of insurance. It is possible to have the citation nullified in court once you have presented  proof of your insurance, but it could still cost you, as you may be assessed an administrative fee by the court.

If you have an accident while driving without auto insurance in California, the state can suspend your license.

According to California auto insurance laws, if you own a vehicle, you are liable for that vehicle, regardless of who was driving. As the owner, you are responsible for maintaining the legally required liability insurance for that vehicle, regardless of the primary or other driver of the vehicle is.

You are still responsible for maintaining liability insurance on an automobile that you own, but do not drive.

Good news for Californians — affordable insurance for income eligible drivers

The state of California has created a state-wide program called California Low Cost Auto Insurance (CLCA) for income eligible good drivers. The rates are surprisingly cheap, given that California auto insurance rates can be prohibitively expensive, especially for males under the age of 25.

You may qualify if you:

  • Are age 19 or older
  • Have a good driving record
  • Are insuring a vehicle with a value of $20,000 or less
  • Meet the income eligibility requirements
  • Have had a driver’s license for three continuous years

To apply for the CLCA program, you will need to complete a short quiz at California’s Department of Insurance (DOI) website. This will determine your eligibility. Upon passing the questionnaire, the DOI will supply you with a list of certified insurance companies in your area.

For more information about the California Low Cost Automobile Insurance Program (CLCA), call toll-free 866-602-8861.

Optional coverage

Comprehensive coverage is not required under California law. However, as comprehensive auto insurance covers situations like theft, weather-related damages, uninsured motorist insurance and collision, in addition to providing extra medical coverage, it is important to consider adding.

If you purchase a new or used car and finance it with a bank or other lending institution, the lender will often require collision coverage.

Auto insurance and minors

If you’re under 18, a parent or guardian is required to sign your application to driver. They must also verify that they be financially responsible for you as a driver. In California, your parents or guardians are no longer liable for you after you turn 18.

A parent or guardian could be held liable for civil damages if you are in a car accident. You may also be charged with a fine.

In the state of California, while you are a minor, your parent or guardian can have the state cancel your driver’s license.

Driving while visiting California

If you are visiting or have just moved to the state, it is important to recognize that not all out-of-state insurance companies are authorized to do business here. Before driving in California, be sure to ask your insurance provider if you are covered in the case of a collision. If you have a collision here, you must meet all three of the following conditions in order to eliminate the possibility of having your driving privileges suspended:

Your liability policy must equal or exceed the bodily injury and property damage minimum coverage as stated above.
Your insurance company must file a power of attorney allowing the CA DMV to act as its agent for legal service in California.
You must insure the vehicle before you arrive here. You cannot renew an out-of-state policy, once the vehicle is registered in California.

Average annual cost of insurance

California is the sixth most expensive state in the nation when it comes to insuring an automobile. The average annual auto insurance premium cost for 2011 is $1,991.

Telephone numbers:

Consumer Hotline (for all aspects of insurance, including auto)
1-800-927-HELP (4357)
8:00 a.m. to 5:00 p.m. M-F

California Low Cost Auto Insurance Program

California Department of Insurance
300 South Spring Street, South Tower
Los Angeles, CA 90013



Insurance Information Institute
California Department of Insurance,
California Drive Handbook,