With expenses increasing and income decreasing, it may be tempting to cut costs by eliminating auto insurance coverage. You may think that if you have a valid license and a car, you are all ready to hit the road: Not so fast. The purpose of car insurance is to protect people from financial hardship after an accident. All states have financial responsibility laws, requiring some form of financial responsibility or liability in the event of an accident. Most states require a driver to have valid car insurance. If you have been in a car accident without having insurance, the penalties can be severe.
Anyone with a California driver’s license must comply with Vehicle Code section 16028. To satisfy the California financial responsibility laws, you must have auto liability insurance or post a substantial cash bond with the Department of Motor Vehicles. You must carry proof of your liability insurance, or an acceptable alternative proof, with you at all times when you are driving. You must produce proof if:
- A police officer asks you for it
- You have an accident
- You register your car or renew your registration
- Your car is inspected
Proof of auto insurance generally means a card or paper issued by your insurer. It will include the driver’s name, the policy number, information on the insurance company, and the dates of coverage. Most insurance premiums are paid either monthly, quarterly, or annually. The dates are important because if you miss a payment, your coverage may expire. Many insurance companies offer proof of insurance through a mobile app. California drivers can provide proof of insurance on their cell phone. If you do not have proof of liability insurance with you, you are breaking the law and are subject to penalties. Some judges may be lenient if you appear in court with a proof of insurance covering the date of the incident, but they are not required to be.
California’s Proposition 213 limits the amount of compensation that an uninsured driver can collect for damages caused by the negligent actions of an insured driver. Known as the no-pay no-play law, it means that an uninsured driver cannot sue the person at fault for “non-economic” losses. The uninsured driver can still recover for losses such as car repairs or medical bills, but not for non-economic losses such as physical or psychological pain and suffering. Even when it comes to economic losses, the no-pay no-play law requires the uninsured driver to deduct $10,000 before suing for property damage.
Amount and Type of Insurance Required
The purpose of liability insurance is to compensate those who suffer personal injuries or property damage in an accident caused by you. California law determines the minimum amount of insurance that car owners must carry. The legal minimum liability coverage is 15/30/5, which means:
- $15,000 for injury or death to one person (another driver, passenger, pedestrian, etc.) in an accident you cause
- $30,000 for injury or death to more than one person in an accident you cause, and
- $5,000 for damage to property in an accident you cause.
If you desire higher limits, the policy will be more expensive, but the protection will be greater. Higher limits can help protect your personal assets.
You may also choose additional coverage, such as comprehensive and collision insurance, for property damage, uninsured/underinsured motorist coverage, and Med Pay coverage for injuries or wrongful death.
Penalties for Driving Without Insurance
Because California law requires you to demonstrate financial responsibility, if you are caught driving without insurance, there may be a number of penalties. The penalties vary, depending on the circumstances. If your lack of insurance is discovered when you are receiving a ticket, through an online registration check at the Department of Motor Vehicles, or in an accident, these factors may affect your penalty. The cost of your insurance may also go up. If you have an accident and then buy a car insurance policy right after, the policy will only apply to accidents that happen after you buy it.
California Vehicle Code Section 16029 sets forth the statutory penalties for driving without insurance. Whether you are a resident or merely driving in California, drivers operating a vehicle without valid insurance or other acceptable proof of financial responsibility will be fined from $100 to $200 for a first offense and $200 and $500 for a second offense. Additional penalties and fees may make those fines much higher.
In addition to fines, your car may be towed and impounded. In that case, you will be unable to get it back until you have obtained insurance and paid all towing and storage fees. If you do not have insurance and are involved in an accident, whether or not you are at fault, your license may be suspended for a period of up to four years. In some cases, you can have your license reinstated after one year. To do this, you must obtain valid insurance, supply proof of that insurance to the Department of Motor Vehicles, and pay a reissuance fee.
You will also have to obtain an SR-22 insurance policy in addition to your regular policy. An SR-22 Proof of Financial Responsibility is actually not a type of insurance. It is a document that your insurance company has to provide to the government to prove that you are appropriately insured. This filing may be required for a few years after an incident.
You may be driving without insurance because of financial problems. Perhaps delinquent payments or a problem caused by changing insurance plans may have led to a lapse in coverage. Whatever the reason, driving without insurance puts you at risk. If you are involved in a car accident, and your car is not insured, whether or not you are at fault, you should contact an experienced attorney to review the facts of your case. For further information or to schedule an appointment, contact us today at (866) 434-1424.