California demands only liability insurance for its drivers. These liability requirements are as follows:

• $15,000 of Liability Bodily Injury coverage per person injured
• $30,000 of Liability Bodily Injury coverage per accident
• $5,000 of Property Damage coverage per accident

These requirements are often referred to at insurance companies to 15-30-5.

What is Liability Insurance?
Liability insurance refers to insurance you pay to the other driver and passengers if you were at-fault for an accident. You pay them back for injuries and deaths they may have suffered in the accident. This insurance also reimburses the other party for damage you caused to their car or other property.

Auto accidents are extremely common in California, with its notorious traffic, so California legislators established the liability insurance requirements to cut down on accident expenses. In fact, California insurance agents recommend purchasing more than the minimum coverage for liability insurance. Statistically, it is a good bet that if you damaged another vehicle, you would have to pay well above $5,000 to finance their car repairs or replacement. In addition, medical costs are at an all-time high, so purchasing only $15,000 of insurance will most likely fall short of the need.

Besides Liability Insurance, Are There Additional Types of Insurance I Should Purchase?
One recommended type of insurance is Personal Injury Protection (PIP). With PIP, you pay only for your own medical bills, lost wages, childcare, and funeral costs. The minimum recommended amount of PIP coverage is $10,000.

However, it is debatable whether PIP is even necessary in California, since California uses a tort system for auto insurance. A tort system requires the state to name a person as responsible for causing an accident. The at-fault person is then required to pay for all charges incurred in an accident, from medical bills to car repairs.

PIP, therefore, is usually required in non-tort states, or no-fault states, because these states are not legally bound to name one driver as the at-fault party. Therefore, PIP is also known as no-fault insurance, because it always reimburses you and your vehicle even if you caused an accident.

Yet, California highly recommends purchasing uninsured/underinsured (UM/UIM) coverage. Today, this coverage is perhaps even more important than PIP. That is because in all 50 states, there are still countless people who defy their state’s financial responsibility laws and drive the roads uninsured. There are also people who are only minimally insured, meaning that they either purchase only the minimum requirements or not even that much. Because of their meager insurance, these people could not fully reimburse you if they caused an accident. That is why it is a good idea to purchase both UM/UIM and PIP as part of your insurance policy. You can’t rely on other drivers to repay you for your costs, because so many of American drivers are either poorly insured or non-insured. Therefore, most insurance agents recommend that you purchase at least $50,000 of UM/UIM, or as much UM/UIM as you can afford.

Besides PIP and UIM, Collision Coverage and Comprehensive Coverage are other insurance options that can fill out the gaps in your financial security. Collision Coverage refinances the repairs or replacement of your car due to a collision with another vehicle or with a stationary object. Comprehensive Coverage likewise pays for the repairs or replacement of your car due to non-collision events, such as damage by inclement weather or theft.

Besides a premium, both Collision and Comprehensive insurance require paying deductibles. Deductibles can quickly become expensive, so it is recommended that you pay for the lowest deductible offered in the coverage options.

It is important to note that the majority of California residents purchase all these additional types of coverage. It is a moot point whether PIP, UM/UIM, Collision Coverage, and Comprehensive Coverage is even necessary for Californians. However, many residents purchase as much coverage as they can to reassure themselves they are financially safe.

What are the Penalties in California for Not Purchasing the Required Insurance?
Though California’s insurance requirements are fairly inexpensive, the state wastes no time in punishing uninsured and underinsured motorists. In 2006, the state declared that all California insurance companies are required to report to the state Department of Motor Vehicles (DMV) all insurance status information relating to their clients. If the DMV finds that a client has falsely reported insurance information to the insurance company, the DMV will suspend that client’s registration. Furthermore, the DMV requires motorists to have in their car, at all times, their proof of insurance documentation. This documentation usually takes the form of a card issued by the insurance company to the motorist.

In California, any resident caught without the required liability coverage faces harsh penalties. If the driver is found without proof of insurance, he will at least receive a citation. If he has proof of insurance, he can present it to a court within 24 hours and usually get off by paying administrative fees. However, drivers who cannot present this proof will face suspension of their vehicle registration and impoundment of their vehicle. They will be suspended until they can provide proof of insurance coverage to the state DMV. Moreover, they are required to pay about $100-200 in fines due to violating California’s proof of financial responsibility law.

Repeat offenders face steeper fines of $500 as well as longer suspension periods. California imposes these harsh penalties in order to reduce the high incidence of uninsured drivers in the state.

How Do I Go About Purchasing Insurance in California?
Purchasing insurance in California is a simple affair, especially when you consider the adverse penalties for being caught lacking it. The average premium paid per year for auto insurance is about $833, an appreciably smaller amount than in many other states. California operates thousands of insurance agencies that can quote you dozens of affordable policies. If you are planning a move to California, be sure to arrange your insurance well before you ever drive in the state.