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California Car Insurance Basics

While getting car insurance in California is very similar to getting auto insurance in other states, there are some California car insurance basics that every driver in CA should know. These are simple, straightforward guidelines to help California drivers make sure their auto insurance policies fall within law's requirements and help ensure the safest possible roads for all drivers in the state.

California State Auto Insurance Requirements

The state of California requires that everyone who operates a private passenger vehicle have minimal liability insurance. Liability insurance covers damage to another person or property if you are in an accident and deemed at fault. California mandates that every driver have $15,000 of liability insurance to cover the injury or death of one person, $30,000 to cover the injury or death of more than one person, and $5,000 to cover any damage to property (this includes damage to another vehicle). Most auto insurance providers in the state know these requirements and will not sell you a policy that offers less coverage. However, it is your responsibility, as an individual motorist, to check your policy and make sure you are covered in at least these minimal ways.

To more effectively enforce their liability insurance regulations, California requires that the state work with auto insurance providers to make sure that all motorists have this minimal liability insurance. The insurance companies send electronic reports to the state, noting new policies, canceled policies, and any policies that do not meet minimum amounts. This means that you cannot cancel an auto insurance policy after you register your vehicle, because your cancellation will be reported to the state and they will cancel your vehicle's registration.

If purchasing these minimal amounts of liability insurance is financially difficult for you, CA does offer a low cost auto insurance program for those who qualify. This insurance enables drivers to meet the minimal amounts of liability insurance mentioned above in a way that is affordable for them. This program also offers some other forms of insurance at a minimal cost, so that if drivers want some enhanced coverage, they can get it. To qualify for this program, applicants must be at least 19 years old and have had a driver's license for at least three years, qualify as a good driver, have a vehicle that is valued at less than $20,000, and have a household income that falls under California's income eligibility requirements. In addition, the program offers five different payment plans, so qualifying drivers can pay in the way that is easiest for them. While participants in this program cannot choose their auto insurance company, they can rest assured that they are covered if they cause an accident at a minimal cost to themselves.

In addition to requiring minimal amounts of liability insurance, another of the California car insurance basics is that a motorist must provide proof of their auto insurance coverage in certain situations. Motorists need to have one of the standard cards from their auto insurance provider or a particular affidavit that fulfills the state's requirements on hand so they can show it when a law enforcement officer requests it, when the vehicle is involved in a traffic accident, when the vehicle's registration is being renewed, within 45 days of canceling a policy for a registered vehicle, or within 30 days of registering a vehicle for the first time in CA or upon transfer of ownership. It is generally a good idea to keep a vehicle's registration card and proof of insurance together somewhere in the vehicle, so that if an accident occurs or you are pulled over by a police officer, these documents are easily accessible.

The state of California reserves the right to cancel a vehicle's registration if at any time the driver fails to maintain the minimum amount of liability insurance. Thus, if you register a vehicle that is new to the state or new to you and fail to provide proof of insurance (or your insurance company fails to notify the state electronically), your registration can be canceled. The same will happen if you cancel a policy and do not pick up another one within 45 days or if the state believes you have obtained your registration based on a fraudulent proof of insurance. If CA has to cancel your registration, they will notify you in writing. You can always reinstate the canceled registration by demonstrating proof of insurance and paying a $14 fee (fee amount subject to change).

California does offer one category of registration that does not require liability or any other kind of auto insurance. If you put your vehicle on Planned Non-Operation (PNO) status, it does not have to carry insurance. You will need to let the state know that you are not going to be using the vehicle, and will need to fill out and Affidavit of Non Use. Once this document is completed and processed by CA, your registration will be canceled and no one will require you to carry insurance on the car. The benefits of registering an unoperated vehicle with PNO status is that it keeps the vehicle on the state's record books. This makes it easier to re-register the vehicle later, or to sell it to another driver.

Auto Insurance on Leased Vehicles

If you are leasing an automobile in the state, one of California's auto insurance basics is that the company holding the lease (the lender) is able to write into the lease the type of auto insurance that the lessee must carry on the leased vehicle until the end of the lease period. This can, and often does, go above and beyond the minimal insurance requirements set by the state. If you do not keep up insurance in the types and amounts required, or cannot prove to the lender that you have this insurance, the lender has a couple of legal options. They can either obtain insurance on the car themselves and charge you for it, or they can cancel the lease and take back the car. Since the insurance policies that lenders find are not necessarily through companies that offer the best deals, and since no one wants to lose a vehicle over insurance issues, it behooves you, as the lessee, to know your lender's insurance requirements and make sure you are following them and can prove it.

Following California Car Insurance Basics

Overall, following the California car insurance basics is not difficult. In addition, following these easy rules has the benefit of making the roads safer for everyone who drives or rides in a vehicle, because any property damage or physical injury incurred because of another motorist is more likely to be covered by that motorist's insurance. While the information above may seem like a lot of information to absorb at once, California car insurance requirements are actually pretty straightforward and very much in line with the requirements of other states. In addition, your auto insurance provider should be aware of CA's requirements and be willing and able to help you make sure your insurance meets all of the requirements. If you need more information on California car insurance basics or how to make sure you meet them, contact the California Department of Insurance at (800) 927-4357 (HELP).


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