California’s Vehicle Financial Responsibility and Suspension Laws


The insurance requirements for the registration of a vehicle in California are a part of California’s vehicle Financial Responsibility and Suspension Laws. The law changed in 2006. The California Department of Motor Vehicles also changed the way it verifies motorist coverage insurance for personal use vehicles. The changes made guarantee that all vehicles being driven in the state of California have liability insurance that affords financial responsibility for damages or injuries caused by a traffic accident in spite of fault.

The changes were also implemented to get rid of the fleet of uninsured vehicles driving illegally on California roads and highways. Insurance companies in California are now required by law (California Vehicle Code [CVC] §16058) to electronically file and report personal use vehicle insurance information to the California Department of Motor Vehicles. An insurance company is not required to electronically report insurance information for vehicles that are covered by business insurance policies or a commercial insurance policy.

Law enforcement and California courts have electronic access to the status of your insurance policy that is available on the California Department of Motor Vehicles records. The requirement to provide financial responsibility is mandatory, it is required that any vehicle operated or parked on a California roadway be in compliance with the California Financial Responsibility requirements. Vehicle operators must carry proof of financial responsibility in the vehicle at all times and it must be presented whenever requested to do so by law enforcement, when renewing the vehicle registration and when a vehicle is involved in a traffic collision or accident. Proof of financial responsibility can be established by providing any of the following documents when requested to do so; an identification card issued by an insurance company, a Department of Motor Vehicles authorization letter stating that you are self insured or that you comply as a cash depositor, a California Proof of Insurance Certificate (SR22) for broad coverage or an owner’s policy and proof that the vehicle is owned or leased by a public entity.

The minimum liability insurance requirements for private passenger vehicles in California are $15,000 for injury or death to one person, $30,000 for injury or death to more than one person and $5,000 for damage to property. Liability insurance compensates a person other than the policy holder for personal injuries or property damage. Although the minimum liability requirements are set by the state of California, those limits are not enough to cover damages and injuries that arise from significant injuries and damage. You should discuss increasing your liability limits with an insurance broker or agent and you will see that the difference is usually very low or irrelevant compared to being adequately protected.

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