California Financial Responsibility Law – How Does it Work?

Posted on February 24, 2022

California’s financial responsibility law requires motorists to carry “proof of financial responsibility,” which usually means proof of auto insurance. The law is largely codified in California Vehicle Code Sections 1600-16078 VC and is sometimes referred to as “California’s Compulsory Financial Responsibility Law.”

Under California law, the minimum amounts of insurance coverage for private passenger vehicles are:

• $15,000 for personal injury/death to one person,
• $30,000 for personal injury/death to more than one person, and
• $5,000 for property damage.

If a driver violates state law and does not meet all financial responsibility requirements, then the motorist:

1. is charged with an infraction,
2. must pay a fine between $100 and $200 for a first offense, and
3. must pay a fine between $200 and $500 for any subsequent offense.

1. What is “financial responsibility” in the State of California?

The financial responsibility law requires California drivers to provide proof of financial responsibility when requested to do so by a peace officer.¹

Drivers and vehicle owners can prove financial responsibility via:

• proof of car insurance (typically by presenting an insurance card issued from an insurance company),
• a self-insurance certificate or certificate of cash deposit issued by the California Department of Motor Vehicles (DMV),
• proof of coverage as an insured or principal under a form of liability insurance policy or surety bond,
• a California Proof of Insurance Certificate (SR-22) form,
• evidence that a motor vehicle is owned or leased by a public entity,
• a Notification of Alternative Forms of Responsibility (REG 5085) form, or
• a Statement of Facts (REG 256) form.²

2. What type of car insurance coverage does a California driver have to carry?

The minimum liability insurance requirements for private passenger vehicles in California are:

• $15,000 for injury/death to one person,
• $30,000 for injury/death to more than one person, and
• $5,000 for damage to property.³

Note that liability coverage compensates a person for personal or bodily injury or property damage, typically suffered after a traffic accident or car accident.

Note also that:

• comprehensive or collision insurance and med pay do not satisfy California’s insurance requirements, and
• California drivers are not required to carry uninsured or underinsured motorist (UM/IM) coverage.

3. What if a driver violates the financial responsibility law?

If a driver cannot provide a law enforcement agent with evidence of financial responsibility, then the agent will issue the motorist a traffic ticket under Vehicle Code 16028a.

A 16028a ticket carries a $900 fine, but no DMV points. The $900 includes a base fine of $100 to $200 plus penalty assessments.⁴

But if the defendant can show he/she had automobile liability insurance at the time of the violation, the court should dismiss the case for a $25 administrative fee. Or if the defendant gets proper insurance information/coverage soon after the violation, prosecutors may be open to reducing the fine and may even dismiss the charge altogether.

Note that a subsequent 16028a ticket within three years is charged as an infraction, but the base penalty is $200 to $500. With penalty assessments, the total fine is around $1,200.⁵

Further, if no insurance information, the court does have the discretion to impound a vehicle “for good cause shown.” The registered owner can retrieve the car upon showing evidence of financial responsibility.⁶

4. What if a person cannot afford insurance?

Some people cannot afford automobile insurance. If so, they may be eligible for the Low-Cost Automobile Insurance Program.

Information about this program is available at:

• mylowcostauto.com, or
• 1-866-602-8861.

5. What if someone has insurance but then stops driving a vehicle?

Drivers can cancel their insurance if they stop driving for whatever reason.

If they do, they have to submit an Affidavit of Non-Use (ANU) (REG 5090) form to the DMV.

A person may obtain this form either:

• online at dmv.ca.gov,
• by calling the automated voice system at 1-800-777-0133, or
• by mail to one of the DMV addresses.

6. Can someone reside in California and carry insurance from another state?

A person may live in California and carry insurance from another state if the person:

• spends several months of the year in the other state, or
• is attending college in the other state.

Note though that it is considered auto insurance fraud if a person carries insurance from another state and does so because the rates in the other state are lower.

If a person commits this fraud, then the following can occur:

• the DMV can suspend the person’s driver’s license,
• the DMV could revoke the person’s driving privileges,
• the driver’s insurance could get canceled, and
• the person may face time in county jail.

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