CA State Law

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.

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.
    • Make.
    • Model.
    • Year.
    • Safety rating.
    • Value.
  • 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.

Suspended Registration

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 Vehicle Registration Suspensions Insurance Programs page
  • By mail with your notification letter to:

DMV 
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.

As of September 2013, to be eligible for the CLCA, your household income level cannot be higher than the following:

  • $28,275 for a 1-person household.
  • $38,775 for a 2-person household.
  • $48,825 for a 3-person household.
  • $58,875 for a 4-person household.
  • $68,925 for a 5-person household.
  • $78,975 for a 6-person household.
  • $89,025 for a 7-person household.
  • $99,075 for an 8-person household.

The price of the CLCA insurance premium varies by county.