California Financial Responsibility Law – How Does it Work?

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.

The law is largely found in Vehicle Code Sections 1600-16078 VC and is sometimes called “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 you violate state law and do not meet all financial responsibility requirements, then you:

1. are 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

You 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 do I have to carry in California?

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 you 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
• You are not required to carry uninsured or underinsured motorist (UM/IM) coverage.

3. What if I violate the financial responsibility law?

If you cannot provide a law enforcement agent with evidence of financial responsibility, then the agent will issue you 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

However if you can show you had automobile liability insurance at the time of the violation, the court should dismiss the case for a $25 administrative fee. Or if you get 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 I cannot afford insurance?

If you cannot afford automobile insurance, you 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 I have insurance but then stop driving a vehicle?

You can cancel your insurance if you stop driving for whatever reason.

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

You 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 I reside in California and carry insurance from another state?

You may live in California and carry insurance from another state if you:

• spend several months of the year in the other state, or
• are attending college in the other state.

Note though that it is considered auto insurance fraud if you carry insurance from another state and do so because the rates in the other state are lower.

If you commit this fraud, then the following can occur:

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

Suggested Additional Reading:

California Department of Insurance – Auto Insurance: https://www.insurance.ca.gov/01-consumers/105-type/95-guides/01-auto/auto101.cfm

The California Department of Insurance provides guides on auto insurance requirements and laws in California.

California DMV – Insurance Requirements: https://www.dmv.ca.gov/portal/vehicle-registration/insurance-requirements/

The California DMV website outlines state laws on minimum auto insurance requirements and penalties for driving uninsured.

Insure.com – California Car Insurance: https://www.insure.com/car-insurance/california.html

Insure.com provides information on average car insurance rates in California, state requirements, and consumer guidance.

California Low-Cost Auto Insurance Program: https://www.mylowcostauto.com/

This program provides low-cost liability auto insurance for eligible CA drivers who have trouble getting affordable coverage.

Insurance Information Institute – California: https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists#California

The III site offers facts and stats on uninsured drivers in California and the costs/consequences of driving without insurance.