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Car Insurance in California
Car insurance is a legal requirement in California. At a minimum, drivers must hold liability insurance. The state, however, offers discounts and a program for low-income drivers.
California Car Insurance
Are you shopping for affordable car insurance quotes? California insurance companies are required to offer you a good driver's discount if you have a clean driving record. Read more to learn about California car insurance rates, laws, and programs.
Car Insurance Requirements
California law requires that you have a way to cover costs related to damages or injuries you may have caused in a car accident. Purchasing liability car insurance is the simplest and most common way people choose to meet this requirement.
The minimum amount of liability insurance you must have on your policy is:
- $15,000 for injury/death to one person.
- $30,000 for injury/death to more than one person.
- $5,000 for damage to property.
Other Car Insurance Coverage
While liability coverage is the only type of car insurance coverage you are required to carry in California, there are several other types of coverage available to you, including:
- Comprehensive coverage – This coverage insures you against damages that might occur to your car that do not involve traffic accidents such as theft-related damage.
- Collision coverage – This insures you against damages to your car that occur as a result of a traffic collision such as an accident with another driver.
- Medical and funeral services coverage.
- Uninsured/Underinsured motorist coverage – According to the latest statistics from the California Department of Insurance (CDI), in 2004, 14.43% of California drivers had no car insurance. Uninsured/underinsured coverage can cover damages caused by one of these drivers.
- Rental car coverage.
- Towing and labor coverage.
Note: Adding comprehensive and/or collision coverage is generally optional. However, if your car is being financed, your lending or leasing company will require you to purchase comprehensive and collision coverage.
Other Forms of Financial Responsibility
Buying car insurance is the most common way to fulfill your financial responsibility requirements, but it isn't your only option.
Other options to meet the requirement include:
- A $35,000 cash deposit with the CA Department of Motor Vehicles.
- A Certificate of Self-Insurance from the DMV.
- A surety bond of $35,000 from any company licensed to do business in CA.
Proof of Insurance
You must be able to prove you have auto insurance to register your car or renew your registration. Your insurance company will give you an insurance card that can serve as your proof of insurance. Your car insurance card will have:
- Your car's information.
- Safety rating.
- Your name and the name of any other drivers under your car's policy.
- The expiration date of your insurance policy's term.
You will receive a new card every time you renew your car insurance policy.
Additionally, insurance companies in California are required to electronically report your insurance information to the DMV. The California DMV can use these electronic records to verify that you have car insurance.
Getting Pulled Over in California
If you are pulled over by a police officer, you must show your proof of insurance, along with your driver's license and car registration.
Violation Fines and Penalties
If you are pulled over in California without proof of car insurance or any other form of financial responsibility, you may face the following fines:
- $100 - $200 for your first offense.
- $200 - $500 for each offense within 3 years after your first.
The court may impound your car and hold it until you are able to show a proof of insurance.
Not having car insurance in California can also result in a suspension of your car's registration if:
- The CA DMV is notified of your insurance cancellation and you have not replaced it within 45 days.
- Your car insurance information is not given to the DMV within 30 days of your car's initial registration or transfer of ownership.
- You registered your car with false evidence of insurance.
The DMV will send you a letter if your registration has been suspended due to not having car insurance. You can re-register your car with a proof of insurance at the cost of $14. You can apply for reinstatement:
- Online at the DMV's Vehicle Registration Suspensions Insurance Program page.
- By mail with your notification letter to:
PO Box 997405
Sacramento, CA 95899
- By mail without a notification letter to:
DMV VRFRP Unit
PO Box 997408 N305
Sacramento, CA 95899-7408
- By phone at (800) 777-0133.
California's Proposition 103
Before 1988, California was among only a small handful of states that had no state-governed regulations on the insurance industry. As a result, California auto insurance rates kept climbing to levels that were not affordable to many people.
To combat what many saw as arbitrary insurance rates, Californians voted into law Prop 103 on November 8, 1988, which called for consumer-driven regulation on insurance companies.
Under Prop 103, insurance companies were required to cut their rates to 20% less than what they were in 1987. Any rate changes from that point would have to be approved by the California Department of Insurance.
Among the provisions of Prop 103 are rules regulating how insurance companies determine your car insurance premiums and the Good Driver Discount policy.
Good Driver Discount Policy
Because of Prop 103, California law requires insurance companies to offer a 20% discount to good drivers. You qualify for this Good Driver Discount policy in California if:
- You have been licensed to drive for the past 3 years.
- During the past 3 years you have not:
- Had more than 1 point on your driving record due to a violation(s).
- Taken traffic school because of a traffic violation more than once.
- Been the at-fault driver in an accident that resulted in injury or death.
Determining Your Insurance Premium: Credit Score
Prop 103 makes it illegal for insurance companies in California to use your credit history as a factor in determining the cost of your car insurance premium. Because of this, other factors may carry more weight.
These factors may include:
- Your driving record.
- Your age.
- Where you live.
- The make/model of your car.
- The purpose of your car (e.g., commuting or personal use).
California's Low Cost Auto Insurance Program
The Low Cost Automobile Insurance Program (CLCA) was established in California in 1999 to give income eligible drivers a way to get car insurance at an affordable price in order to combat the high number of low-income drivers without car insurance.
To qualify for the CLCA you must:
- Have a valid California driver's license.
- Own a car with a value of $25,000 or less.
- Be at least 19 years old.
- Meet the income requirements
California's Automobile Claims Mediation Program
If you have a dispute over a claim with your insurance carrier, you may be able to take advantage of California's Auto Claims Mediation Program, which provides a way to help settle claim disputes with the assistance of a third-party mediator at no cost to you.
You may be eligible for the program if the dispute with your insurance provider involves:
- The extent or amounts of damages.
- Methods of repair.
- Cause of damage.
- Prior damage vs. recent damage.
- Total loss.
- This is when an insurance company declares your car not repairable and reimburses you the estimated value of the car instead of repairing the car.
- Value of a total loss.
You are not eligible for the mediation program if the dispute involves the following issues:
- Coverage issues.
- Legal interpretations of your policy.
- Statute of limitations and contractual limitations on claim filing periods.
- Agent or broker actions.
For more information about CA's Auto Claims Mediation process, visit the CA Department of Insurance website.
Automobile Assigned Risk Plan
The California Automobile Assigned Risk Plan (CAARP) is a program to help get all drivers properly insured. If you cannot find a car insurance company, due to a poor driving record, you can apply for liability insurance through CAARP.
All California car insurance companies must accept a certain amount of CAARP applicants depending on their share of the market. The higher the amount of standard customers they have, the higher amount of CAARP applicants they must take.
Once you have a clean driving record for a consecutive 3 years, you can purchase your car insurance outside of CAARP.
California at a Glance
Electronic Insurance Cards
California's Vehicle Code states that if you do not have your car insurance card, you may be able to pull up your insurance information on your smartphone. Several car insurance carriers have smartphone apps that allow you to access an electronic insurance card.
Car Theft In California
California is the car theft capital of America. In 2011, according to a report issued by the California Highway patrol, 156,796 vehicles were stolen, at an estimated cost of one billion dollars.
Car Theft and Your Car insurance Rates
When calculating a policyholder's insurance rate, many car insurance companies consider the risk of car theft in a given area. Since car theft rates in California are high, you pay a higher rate.
California car theft hurts everyone that has car insurance. By educating yourself about the types of cars and trucks that are stolen and learning simple ways to prevent your car from being stolen, you're taking positive steps toward keeping car insurance rates low for everyone.
Most Stolen Cars in California
Driving a car that is often targeted for theft may increase your car insurance rates.
The following is a list of the most commonly stolen cars in California for 2013 according to www.nicb.org:
- Honda Accord.
- Honda Civic.
- Chevrolet Pickup (Full Size).
- Toyota Camry.
- Acura Integra.
- Ford Pickup (Full Size).
- Toyota Corolla.
- Nissan Sentra.
- Nissan Altima.
- Toyota Pickup.
According to the California DMV, every driver will be involved in a car accident at least once in their life, so you should be aware of how to handle such an incident.
When involved in an accident:
- Try your best to pull out of traffic and onto a safe spot at the side of the road.
- Never flee the scene. You may risk a hit-and-run conviction.
- Check for any injuries to anyone involved.
- Report the accident immediately if anyone is injured or killed.
- Exchange car insurance information with other drivers involved in the accident.
If you are in an accident that causes more than $750 in damages, you must report the accident within 10 days by completing a Traffic Accident Report (Form SR 1).
Cell Phone Use
The CA DMV states that about 10% of drivers use their cell phones while driving.
Even with hands-free devices, studies have shown that cell phone usage is highly distracting.
For safety measures, the state of California has made it illegal to text or use hand-held cell phones while driving. If you are over 18 years old, you may use a hands-free device to make phone calls.
If you must make a call while driving, follow these tips to help you stay safe:
- Try to pull off the road when possible.
- Do not get involved in emotionally heated discussions.
California law states if you are under 18 years old, you are NOT allowed to use a cell phone for any reason while driving, including texting and making calls this includes a hands free device.
Remember, all violations can affect your car insurance premiums. Stay safe and keep your car insurance rates low.
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