Do I Have The Right Level Of Car Insurance for California?

Posted by AardvarkCompare.com on July 14th, 2016

Did you know that your insurance company is required by law to report your insurance status to the California Department of Motor Vehicles?

While that may feel a bit strange to you- it's really for the common good. After all, uninsured drivers account for billions of dollars of insurance claims on policies held by drivers who are insured. The costs are passed onto drivers in the form of higher premiums. 

California is part of a nationwide movement to crack down on uninsured drivers- here's what you need to know to stay compliant. 

Liability Insurance Requirements for California

Beyond making sure you get insurance for your car, there are also questions about how much you really need. Most states require some level of liability, which is what pays for damage or injury to others caused by your car. 

In California, these are the minimum liability insurance requirements (for private vehicles - commercial vehicles are a whole separate matter):

• ,000 for injury or death (one person)
• ,000 for injury or death (two or more people)
• ,000 for property damage

What is “Financial Responsibility”?

The California DMV uses the term "financial responsibility" where you'd expect to hear the word insurance. That's because although insurance is the most common form of financial responsibility for a vehicle, there are actually a few others. They are:

• A very large cash deposit with the California DMV (we're talking ,000) in case you cause damage or injury or death with your car... this is to go towards covering the costs.
• A surety bond, which is essentially the same as above, only you don't have to come up with the cash unless a situation occurs and you're found liable. You deal with a third-party company licensed to do business with the State, and they guarantee you for ,000. If you need to ante up for an accident, they'll pay and then collect from you. 
• A self-insurance certificate, which is issued by the DMV. This is not so common, and usually an option taken by individuals who own a fleet of cars. As such, it's more common to see companies with self-insurance.

Of the options above, buying car insurance is the best option since it doesn't require you to have a large stash of cash on hand to give to the DMV or your surety bond company. 

Penalties are Stiff

Since insurance companies report your insurance status to the DMV, it's important to stay insured. You may risk suspension of your vehicle registration if you cancel your insurance policy without getting a new one within 45 days. Even if you purchase another policy right away, keep the DMV informed. 

Do yourself a huge favor and stay insured - and it may be even less costly than you think if you shop around for multiple quotes. It's always a good idea to get insurance quotes from multiple carriers before committing. We make it quick and easy. Give us 2 minutes and input some basic information anonymously and we’ll submit to over 30 carriers in one go. Try us out at AardvarkCompare.com