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Wallet Canvas > Insurance > California Auto Insurance Law | Bank Rates
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California Auto Insurance Law | Bank Rates

June 3, 2025 7 Min Read
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California Auto Insurance Law | Bank Rates

People in Socal and Norcal often think that half of the states are very different from each other, but California drivers are bound by the same auto insurance law. From rural Redwoods towns to Metropolitan Center in Los Angeles, California, state residents must meet the minimum state coverage, but simply meeting the letter of law may not provide sufficient financial protection.

California Auto Insurance Law

The California Department of Motor Vehicles requires that all drivers maintain certain levels of car insurance coverage to drive their vehicles on public roads. California’s Auto Insurance Act also requires you to maintain proof of your vehicle’s insurance at all times. When requested by law enforcement, and after an accident, when renewing your vehicle registration with a DMV, you must present this insurance proof physically or digitally. Below is a list of the forms accepted by the states that are certified as proof of insurance.

  • Auto insurance contracts that meet the state’s minimum coverage limits
  • $35,000 cash deposit to DMV
  • Self-insurance certificate issued by DMV
  • $35,000 guaranteed debt from licensed California operations

Consumers need to follow these compensation laws, but California’s highly regulated insurance industry must follow strict guidelines when setting pricing. California law allows insurers to consider a specific list of rating factors when pricing automatic coverage. This excludes common factors used in other states, such as gender and credit rating.

California Liability Insurance

According to state law, all drivers in California must have at least a minimum liability insurance coverage amount and financially protect themselves and other drivers. This includes the following restrictions:

  • 30,000 dollars per person bodily injury liability compensation
  • $60,000 for compensation for physical injury liability per accident
  • Liability of $15,000 for property damages per accident
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In addition to compulsory liability insurance, the insurance company must provide uninsured/uninsured driver coverage to all drivers, but you may choose to decline this coverage in writing.

There is no guarantee that California minimum liability requirements are sufficient to cover the full cost of a disability accident. Most insurance experts recommend that drivers protect financially to purchase higher liability coverage restrictions and additional coverage. Full coverage auto insurance can also cover physical damage to your vehicle and include the provision of California optional uninsured and underinsured driver coverage.

What is California’s Low Cost Auto Insurance Program?

If you can’t afford car insurance or can’t meet other mentioned financial liability options, California will offer a low-cost car insurance program as an alternative. The program allows low-income drivers to access liability insurance at a much lower interest rate than traditional insurance policies. To see if you are eligible for the program, you can take a survey on the CLCA website.

Penalties for driving without insurance in California

According to California’s insurance law, drivers who do not carry the minimum liability insurance will be subject to penalties. Here are some of the punishments Californians can face to drive without insurance:

  • fine: For your first conviction, you may be charged a fine of between $100 and $200, followed by a conviction increases significantly from $200 to $500.
  • Penalty rating: You may also be eligible for a California penalty rating. A California penalty rating is an additional fee determined based on where you live and the original fine charged. These additional fees allow you to easily double or triple the total fine for driving without insurance in California.
  • Loss of driving privilege: Your vehicle may be closed and your license may be suspended.
  • Continuous insurance filing requirements: You may need to submit a financial liability form for your SR-22 to ensure you have the necessary insurance.
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It is important to note that these are just direct penalties for uninsured driving in California. Also, if you are involved in a car accident while you are uninsured, there are indirect negative consequences, such as high insurance costs for the SR-22 and sudden out-of-pocket expenses.

More car insurance coverage options in California

California minimum car insurance requirements alone may not provide sufficient financial protection. Liability insurance is only useful if it turns out you are liable for damages – what if you are not negligent? Or random behaviour like vandalism, vehicle theft, or fender bender? California drivers may consider purchasing these other types of car insurance, along with the state’s legal requirements, for more robust financial protection.

  • Medical expenses: MedPay is an optional compensation that you pay medical expenses up to coverage limits for you and other passengers in your vehicle, regardless of who is at fault, in the event of an accident.
  • No insurance and Insurance shortage Driver Insurance: If you are involved in an accident caused by an uninsured driver or a driver who has sufficient insurance to cover losses, these coverage types may begin to pay your medical expenses and wage losses. You can also add a small amount of coverage of vehicle damage from uninsured drivers.
  • Gap insurance: Drivers with a lease or loan may consider purchasing gap insurance. After the accident, it covers the difference between the depreciation value of the new car and the remaining loan balance of the vehicle.
  • Roadside support: Roadside assistance covers basic vehicle repair, towing, escape, fueling and battery service if the vehicle breaks down.
  • Car rental compensation: If you are involved in an accident and your vehicle is in a repair shop, this can cover the cost of a rental car up to a certain amount per day for a period of time.
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