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California Financial Responsibility Law: Avoide Penalties

The California Financial Responsibility Law, also known as the Compulsory Financial Responsibility Law, mandates that all drivers in the state must demonstrate financial responsibility for any potential damages or injuries resulting from a car accident. This law requires drivers to have auto insurance coverage that meets the minimum liability requirements set by the state.
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Collen Clark Published by Collen Clark

How Does the California Financial Responsibility Law Work?

According to SCLG, in California, the term “financial responsibility law” refers to the requirement that you carry proof of your ability to cover damages you may inflict in the event of a traffic accident. This usually means proof of auto insurance [1].

This law is primarily outlined in Vehicle Code Sections 1600-16078 VC and is commonly referred to as “California’s Compulsory Financial Responsibility Law.”

According to California regulations, the minimum insurance coverage for private passenger vehicles includes:

  • $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.

Failure to comply with the state’s financial responsibility requirements results in penalties:

  • Being charged with an infraction,
  • Facing a fine ranging from $100 to $200 for a first offense, and
  • Being subject to a fine between $200 and $500 for subsequent offenses.

What are My Claims Options After a Car Accident in California?

According to Nolo, if you’ve experienced an injury as a driver, passenger, or pedestrian, you typically have several options to seek compensation for your losses, including medical expenses, lost income, property damage, and pain and suffering [2]:

  • File a claim with your own insurance provider (if you have suitable coverage, details to follow).
  • Pursue a third-party claim through the liability insurance coverage of the at-fault driver.
  • Initiate a personal injury lawsuit against the responsible driver.

Liability Insurance in California

In California, most drivers opt for an auto insurance policy to meet their financial responsibility obligation. State law mandates that all drivers carry at least the minimum coverage amount for liability insurance to provide financial protection for themselves and fellow drivers on the road.

These minimum coverage limits include:

  • $15,000 in bodily injury liability coverage per person
  • $30,000 in bodily injury liability coverage per accident
  • $5,000 in property damage liability coverage per accident

While uninsured/underinsured motorist coverages are required to be offered, they can be declined in writing.

Bodily injury liability coverage has two limits: per person and per accident. These distinctions determine the amount paid out based on the circumstances.

For instance, if a driver with the state’s minimum liability requirements is responsible for an accident, their insurance provider might compensate each individual in the non-at-fault vehicle up to $15,000 for bodily injury liability-related expenses, such as medical bills, long-term care expenses, and lost earnings, with the total payout for the accident capped at $30,000. Any amount exceeding this $30,000 threshold would be the driver’s responsibility to cover out-of-pocket.

There’s no assurance that California’s minimum liability requirements will suffice to cover the entire cost of an at-fault accident. To ensure better financial protection, most insurance experts advise drivers to invest in higher liability coverage limits and additional coverage options.

Full coverage car insurance encompasses both comprehensive and collision coverage, addressing physical damage to your vehicle and potentially incorporating California’s optional uninsured and underinsured motorist coverage. Collision coverage safeguards your vehicle in case of damage during an accident, while comprehensive coverage extends to other perils like theft, weather-related incidents, and falling objects.

Also Read: Uninsured vs. Underinsured Motorist

What if a Person Does Not Have Proof of Insurance?

In California, adherence to the financial responsibility law mandates that drivers carry proof of insurance. Failure to do so results in consequences:

  • An individual is charged with an infraction.
  • For a first offense, the driver must pay a fine ranging from $100 to $200.
  • For subsequent offenses, fines escalate between $200 and $500.

Vehicle Code 16028 outlines these provisions clearly. Motorists must have proof of liability insurance at all times while driving. This proof must be produced under various circumstances:

  • Upon request by a police officer.
  • In the event of an accident.
  • During vehicle registration or renewal.
  • During a vehicle inspection.

It’s important to note that a police officer cannot pull over a driver solely to verify insurance. However, they may request proof if there are other justifiable reasons for the traffic stop.

Proof of insurance can be established through various means:

  • Presenting the insurance card issued by the insurance carrier.
  • Providing a letter authorized by the California DMV in cases of cash deposits or self-insurance.
  • Submitting a California Proof of Insurance Certificate (SR-22) form.
  • Offering evidence of vehicle ownership or lease by a public entity.
  • Using a Notification of Alternative Forms of Responsibility (REG 5085) form.
  • Completing a Statement of Facts (REG 256) form.

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If you have been affected by any of these matters, feel free to contact a personal defense attorney that can help.

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