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What Is California’s Compulsory Financial Responsibility Law?

Road traffic accident, car insurance concept. Car hit pile of coins

Financial responsibility laws are state-mandated statutes that require an individual to show proof that they can pay if they are involved in an accident. Most often, financial responsibility laws are associated with vehicles and take the form of car insurance coverage.

California’s compulsory financial responsibility law can be found in the California Vehicle Code in sections 16000 through 16078. This law requires owners and drivers of vehicles to show proof of financial responsibility for any damage or injury they cause in a traffic accident, up to certain minimum required amounts.

While the law itself does not require individuals to have car insurance, this is the most common way people meet the compulsory financial responsibility law. Mandates for auto insurance coverage will typically meet the state standard stipulated by financial responsibility law. For example, California’s financial responsibility law requires auto insurance companies to provide a minimum standard of $15,000 for a single injury or death, $30,000 for injury to, or death of, more than one person in a single accident, as well as $5,000 for property damage. Maintaining this level of auto liability insurance will keep a driver in compliance with the state’s compulsory financial responsibility law.

What Is a Surety Bond?

Nearly all states have some sort of mandate related to automobile liability insurance coverage. New Hampshire and Virginia are the only two states that do not have these mandates.

In Virginia, for example, an individual does not have to have automobile insurance to satisfy the financial responsibility law, but they do have to pay a $500 uninsured motorist fee. While this fee does not take away the burden of paying for damages if an auto accident occurs, it does allow a driver to register a vehicle in order to operate it.

A surety bond is another alternative to car insurance. A surety bond is an agreement in which an individual agrees to be liable for damages that may occur after a car accident. Some states will accept a surety bond instead of car insurance to comply with financial responsibility law. Often, these types of agreements are used by businesses that have a fleet of vehicles that they rent out to others. California’s financial responsibility law can be met by obtaining a surety bond of $35,000 and filing it with the Department of Motor Vehicles. One could also place a $35,000 cash deposit with the DMV to comply with the law.

Requirements of Financial Responsibility Law

Financial responsibility law may also require individuals to show proof of compliance when requested by authorities. This can often be observed in cases where law enforcement officials ask for proof of insurance during a traffic stop or after a car accident. In doing so these authorities can make sure that you are complying with financial responsibility law.

Proof of complying with the law can also be asked of individuals when they are registering their vehicle or are looking to have their driver’s license reinstated.

If an individual does not comply with the authorities when asked to show proof of complying with the law, then they may be subject to fines or other penalties.

Failing to comply can also impact an individual’s auto insurance rate. For example, an insurance company may increase a driver’s rate if they have been the subject of a traffic stop, have received a ticket, or other types of penalties for failure to be lawfully insured.

Certain states may also have other statutes aimed at helping individuals meet the financial responsibility law. For example, in California, if you are a low-income resident, you may be eligible for a lower minimum insurance policy at a reduced cost.

When to Seek Assistance

If you have been the subject of a car accident and have questions about damages, your rights, or financial responsibility, reach out to one of our qualified attorneys today. Let us help you understand your rights to obtain the compensation you deserve.

If you or a loved one has been injured or killed by a negligent driver in Southern California, talk to a seasoned and effective Lancaster car crash attorney about pursuing a claim for damages by calling the Kistler Law Firm at 661-206-6990.

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