California Car Insurance

California is the third largest state in the U.S. The state boasts sandy beaches, vast deserts, and beautiful mountain ranges.

With all types of terrain and a huge population of diverse residents, it may be surprising to learn that auto insurance requirements are enforced statewide, not from county to county.

Compare car insurance rates from multiple companies now by using our FREE tool above!

If you're new to California, it's important to familiarize yourself with not just car insurance requirements but the products that are available to you.

Building an affordable policy that still offers you adequate coverage is what matters most. Here's a helpful consumer guide to California car insurance that you can reference as you shop:

What are California Financial Responsibility (FR) laws?

Ever since the Federal government handed the responsibility of regulating the insurance industry over to state officials, laws regarding auto insurance have varied from state to state.

Some states have mandatory auto insurance programs and others have passed more flexible financial responsibility laws that give residents more options.

California has a Financial Responsibility program in place that doesn't necessarily make auto insurance mandatory.

Instead of requiring that all vehicle owners purchase and maintain auto insurance, the state has decided that owners only have to prove that they're financially responsible enough to cover the third-party damages they cause.

How can you prove that you're financially responsible?

Under the CA Vehicle Code, there are a few different ways to prove that you have the resources set aside to pay for potential injuries and damages.

Here are the state-specific financial responsibility options:

• Make a $35,000 cash deposit with the Department of Motor Vehicles
• Purchase a $35,000 surety bond
• Gain proof of self-insurance through an employer
• Purchase liability insurance through a California carrier

Why is buying car insurance the best alternative?

Not everyone has $35,000 in cash to deposit with the motor vehicle department just to avoid buying insurance. Even if you do have the cash or the property to put up as collateral, it makes the most sense to buy auto insurance with a sufficient amount of coverage.

As a financial product that protects your assets, you can buy a large amount of coverage for a small premium each year.

You're not guaranteed to have a loss, but with auto insurance, you know you won't have to spend your money if you ever have a catastrophic loss.

What are the requirements if you buy liability insurance?

If you satisfy the state law with an auto insurance policy, be sure that you buy your coverage from a provider with a California license. If you don't, the coverage that you're carrying might pay your claims, but it won't satisfy the law.

In California, you have to carry at least the minimum requirement of 15/30/5. Here's what that means:

• Bodily Injury (BI) – Mandatory liability coverage that will pay for someone else's medical bills and for other related expenses if they are injured in an accident that you're primarily negligent for. Liability also pays for court costs separate from your limits. You must have at least $15,000 per person, $30,000 per accident.

• Property Damage (PD) – Mandatory property coverage for third-party damages that you cause while you're behind the wheel of a vehicle. PD is used to pay for repairs or to replace a vehicle when it's totaled. Limits apply no matter how many car are involved. You must have at least $5,000 in Property Damage coverage, but you're able to buy higher limits.

What type of coverage is the state required to offer you?

You're required to purchase third-party liability coverage, but California auto insurance carriers also have some other options.

Since there's a huge risk of getting injured in an auto accident, companies must offer all of the applicants the option to buy both Medical Payments and Uninsured Motorist Protection:

• Medical Payments – Medical Payments will pay for your medical bills if you're injured as an occupant of a vehicle or as a pedestrian in an auto accident. By law, you don't have to carry Medical Payments, but your carrier must offer you a minimum of $1,000 of coverage. You can reject it in writing.

• Uninsured Motorist – Uninsured Motorist Protection pays for your medical bills if someone hits you and doesn't have the coverage to pay your medical bills. Carriers must offer you UM coverage to match state Bodily Injury requirements.

– Should you buy Medical Payments coverage even though it's optional?

If you don't have medical insurance or your plan has a high out-of-pocket cost, you should seriously consider Medical Payments. This type of coverage is also recommended if you frequently drive others around.

– Is Uninsured Motorist Protection really necessary?

It might sound silly to buy insurance to protect yourself from someone who doesn't have it, but the coverage is around for a reason. Uninsured Motorist is something everyone in California should seriously consider. California ranks thirteenth on the list of states with the most uninsured drivers. Even though auto insurance is the law, the statistics show that

California ranks thirteenth on the list of states with the most uninsured drivers. Even though auto insurance is the law, the statistics show that 14.7 percent of the state's population of drivers chooses to drive without insurance.

Since California has one of the highest populations of registered vehicles, you're at a huge risk of getting hit by an uninsured motorist.

In fact, out of the 24.4 million registered cars in the state, almost 3.6 million of these cars don't have coverage. Buying Uninsured Motorist coverage helps to protect you from scenarios that you just can't avoid.

What are the penalties for driving without insurance?

California has some very strict penalties for driving without insurance. The purpose of the penalties is to collect revenues and to steer drivers away from making the mistake. Penalties for driving without auto insurance may include:

• Fine of $100 to $200 for first offense
• Fine of $250 to $500 for second offense
• Fine of $500 to $1,000 for third and subsequent offenses
• Suspension of registration
• Registration reinstatement fee
• Imprisonment for up to 1 year

How is insurance verified in California?

You must keep your ID cards with you at all times while you're driving your car, but the state verifies your coverage in real-time as well.

In California, state officials have developed an electronic verification system that gives insurers a platform to report coverage. Insurers must report insurance status in the following cases:

• When there's a loss reported on an insured vehicle
• When a new policy takes effect
• When a policy lapses or doesn't renew for any reason

How to Choose the Best Insurance Carrier in California

If you're trying to construct a list of the best insurers doing business in California, don't look at just the company's size.

Here are some other things to consider:

• Company's licensing status through the state Department of Insurance
• Company's financial rating and ability to pay out claims through A.M. Best or other agencies
• Customer satisfaction ratings through companies like J.D. Power and Associates
• Claims handling ratings through third-parties
• The menu of products offered by the insurer
• Complaint index officially reported through the National Association of Insurance Commissioners
• Companies hours and the methods of contact that are available
• The discounts that the company offers to clients to save money

It's important to use a checklist to identify the best California carriers.

Once you do this, you can compare premiums. You could contact them all directly, but this would take too much valuable time.

Instead, you can use an online vehicle insurance quoting tool that gives you access to instant California insurance quotes in the blink of an eye. Enter your zip code in our FREE tool below to compare car insurance rates from top companies in your area now!