For state residents to legally drive their vehicles on California roads, they must show proof that they could cover the damages―take financial responsibility―in the event of an auto accident. In most cases, that means maintaining liability insurance.

Ways to Establish Financial Responsibility

The majority of drivers opt for liability coverage purchased through an auto insurance provider. But that is not the only way to establish financial responsibility. The options to do so include:

• Making a cash deposit of $35,000 with the CA DMV. For more information call the DMV at (916) 657-6520 or write to:

• Department of Motor Vehicles

• Financial Responsibility MS J237

• P.O. Box 942884

• Sacramento, CA 94284-0884

• Obtaining a self-insurance certificate from the CA DMV. Contact the agency at the phone number and address above.

• Obtaining a $35,000 surety bond from a company licensed to do so in California. For more info on surety bonds visit the Department of Insurance online or call (800) 927-4357.

• And of course, purchasing a motor vehicle liability insurance policy. For more info on minimum requirements, keep reading.

California Liability Insurance Requirements for Private Passenger Vehicles

Remember, the state does not require you to purchase a liability policy as long as you can swing any one of the other options listed above. But for many people, obtaining car insurance makes more sense. Here’s the minimum liability coverage the state requires:

• $15,000 for injury/death to one person

• $30,000 for injury/death to more than one person

• $5,000 for damage to property

Keep in mind that the following do not require you to provide evidence of liability insurance:

• Off-highway vehicles

• Special equipment vehicles

• Trailers

• Vehicles registered to a government entity (city, county, state, federal)

• Vehicles registered under a planned nonoperation (PNO) status

When looking for a policy that suits your budget and the state requirements, it's best to shop around. At this time, you might also consider purchasing more than the minimum, and possibly additional types of coverage.

Your best bet is to do some research on the variety of coverage options. Then once you settle on and purchase a policy, you'll receive a document or identification card from the provider. Keep this proof of insurance in your vehicle no matter where you go. You might need to present this should you get pulled over by a cop or if you are involved in an accident.

Electronic Reporting

After you obtain auto insurance, your provider will electronically report the info on your private-use liability policy to the CA DMV. This is automatic, so be careful not to let your coverage lapse as the state will suspend your registration for failure to maintain financial responsibility. For more info on the penalties associated with this, scroll down.

Acceptable Proof of Insurance and Financial Responsibility

Again, when you purchase a liability policy your insurance agency will report this electronically to the DMV. But in some cases, the state might require you to also:

• Obtain a document or ID card from your insurance company that says you have adequate coverage, and then submit it the DMV. Please note that the state agency will not return any such documents you submit.

• Submit a DMV authorization letter if you made a cash deposit or if you are self-insured.

• Obtain and submit to the DMV a California Proof of Insurance Certificate (SR-22) for either broad coverage or an owner's policy. Submitting proof of an operator's policy alone will not satisfy California’s financial responsibility requirements if the state has already determined that you need to proved an SR-22.

• Obtain proof that the vehicle is publicly owned or leased (as defined in Government Code 811.2).

• For those defined as motor carriers (in California Vehicle Code 34601), you can submit a statement of facts that indicates you have filed proof of insurance with the Public Utilities Commission or DMV pursuant to California Vehicle Code 34630.

Penalties for Failure to Maintain Financial Responsibility

• Your vehicle registration could be subject to suspension if the following occurs:
  • You fail to replace your liability insurance policy within 45 days once it has been canceled.
  • Your insurance provider fails to electronically provide evidence of insurance within 30 days after the state issued you a registration card on a vehicle that has never before been registered in California.
  • You submit false evidence of insurance.

• You could receive a traffic ticket ($1,000 or more) if you get pulled over by a peace officer and cannot provide evidence of financial responsibility. If you are ticketed you’ll have to go through the court system (and not the DMV) to clear or sign such a citation.

• Your vehicle could be impounded and you could be fined.

• You could be financially responsible for damages associated with an auto accident you had any part in causing. That means being personally liable and forced to pay for any injuries or damage.

NOTE: The DMV does not offer vehicle financial responsibility services. Once your vehicle registration is expired you have to deal with the Vehicle Registration Financial Responsibility Program. Simply call (866) 664-4545.