If you are a resident of California, you will need to register your vehicle with the California Department of Motor Vehicles before you can legally drive in this state. You will also need to obtain a car insurance policy that meets the minimum requirements imposed under California law. Insurance not only allows you to legally drive on California roads; it also helps protect you against financial loss if you are involved in a motor vehicle accident.
California law requires you to carry two types of liability coverage – bodily injury and property damage liability. Bodily injury liability pays for injuries you cause to others if you are at fault in an accident. Your policy must provide at least $15,000 to pay for injuries to one driver or passenger. If you injure more than one person in a single motor vehicle accident, the policy must cover injuries in an amount of at least $30,000.
Property damage coverage pays for personal property you damage or destroy while driving on California roads. In most cases, it pays to fix or replace another person's vehicle. Sometimes, your property damage liability coverage pays for personal property inside the other person's car, or for other property you damage, such as fences, street signs or bridge railings. Your California auto insurance policy must provide at least $5,000 in coverage for property damage.
If you are caught driving without car insurance, you may face fines of up to $500. Your driver's license may be suspended – the length of time depends on the circumstances. In some cases, your vehicle may also be impounded until you obtain a policy meeting California's requirements.
It is important to remember that purchasing only the minimum liability limits will likely not fully protect you against liability. For example, if you collide with a new BMW, your $5,000 property damage limit will not fully cover the cost of replacing the other person's car if it is totaled. You would be responsible for all damages over $5,000.
You can purchase higher liability limits for added protection. Of course, if you select higher liability limits, you will pay more for your auto insurance coverage.
If you have a limited income, you may qualify for coverage under California's Low Cost Insurance Program. Under this program, you could pay less than $400 per year to insure one car. Keep in mind that liability limits under this program are lower than the state-required liability limits – this type of policy only pays up to $10,000 for injuries to one person, $20,000 for injuries to more than one person, and $3,000 for property damage. This increases your risk of being sued if you cause an accident while driving in California.
Although California law does not require you to purchase other types of coverage, it permits auto insurance companies to offer other coverages to increase your auto insurance protection. For example, you may purchase uninsured motorist coverage in an amount up to your liability limits. This coverage is essential for protecting you against having to pay for your own medical expenses if an uninsured motorist causes an accident. Despite California's auto insurance requirements, about 18 percent of drivers in this state elect to drive without at least the minimum amount of liability coverage required under California law.
You may also purchase physical damage coverage to protect your vehicle. This coverage consists of two separate coverages, called “comprehensive” and “collision.” Comprehensive coverage pays for your car if it is stolen or vandalized. It also pays if you hit an animal while traveling on California roads, or if your car is damaged by wind, hail, fire, falling objects or lightning.
Collision coverage provides the same protection, but applies to different circumstances. This coverage pays for your car if you are involved in a motor vehicle accident with another driver, no matter who is at fault. It also covers your vehicle if you are involved in a single-car accident – for example, if you hit a tree, guard rail or building.
It is important to remember that, although your California auto insurance policy applies if you drive in another state, it will not apply if you take your car into Mexico. If you plan to travel to Mexico by car, you will need to purchase a Mexican auto insurance policy to cover you for the duration of your stay.