California Laws of Auto Insurance


All states have laws and regulations for automobile insurance that affect individual drivers as well as insurers. One type of regulation or mandate that exists in California is minimum coverages for liability and property damage. The laws for automobile insurance in California are included in the California Insurance Code. California law includes requirements that need to be met for financial responsibility, including vehicle registration requirements and proof of responsibility.

Financial Responsibility

  • The state of California has a financial responsibility law that requires vehicles driven on state roads to provide financial responsibility in the event of a traffic accident. Another purpose of the law is to remove uninsured vehicles from California highways. Financial responsibility can be met by obtaining an automobile insurance policy, a cash deposit of $35,000 with the DMV, a certificate of self-insurance or a surety bond for $35,000.

Proof of Responsibility

  • All residents in California are required to carry proof of financial responsibility, such as a proof of insurance certificate. This certificate needs to be provided in certain circumstances. This includes being asked by the police, renewing a vehicle's registration or when a vehicle is involved in a traffic accident. A letter authorized by the state's DMV can also be used if a vehicle is self-insured.

Liability Coverage

  • The state of California has minimum amounts of liability insurance that are required, which is consistent with all other states. Liability or bodily injury coverage will pay for injury or death that occurs to another person or persons that are involved in an accident. The minimum amounts in California are $15,000 per person or $30,000 for two people or more.

Property Damage Coverage

  • The state of California also has a minimum coverage amount for property damage. This coverage will pay for the damage or destruction caused to the property of others who are involved in an accident. The minimum amount on an automobile insurance policy in California is $5,000 per vehicle.

Uninsured Motorist Coverage

  • This coverage is not required by a driver in California, but when it is added to a policy, there are limits that must be applied. The amount of uninsured coverage must be the same amount of bodily injury or liability coverage. California automobile insurance companies have a limit to the amount of uninsured motorist or UM coverage that they can provide. This is $30,000 per person and $60,000 for two people or more that are injured in an accident.

Underinsured Motorist Coverage

  • If uninsured motorist or UIM coverage is purchased, an insurer must also include underinsured motorist coverage on the policy. Automobile insurance companies in the state are required to provide coverage for UIM that is equal to the amount that was provided for UM coverage. However, an insurer can offer coverage for UIM that exceeds the amount of UM coverage.


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