Minimum Car Insurance Coverage in California

California Driver License
••• Getty Images/halbergman

A necessity of modern life, insurance is something that is tough to go without—in some cases, it is illegal to not have it. In most states, it is required by law for drivers to have a minimal amount of car insurance. California is one of the states that require residents to purchase minimal insurance coverage for their automobiles.

Minimum car insurance amounts vary by state. For example, the California minimum car insurance coverages and premiums are different from the minimums in North Carolina. Basic car insurance protects you against an accident in which you cause damage to someone else's property or injure another person. More coverage can be purchased to help cover the cost of medical expenses and damage to your vehicle.

It is important to understand the minimum insurance required—by becoming aware of the requirements, you know whether your insurance meets the legal minimums and understand the consequences if it doesn't.

California Minimum Car Insurance

Bodily injury liability is insurance coverage that is designed to pay the medical costs and lost wages due to injuries sustained in an accident that is not the injured person's fault. Liability coverage can also help cover the legal costs if the insured driver is involved in a lawsuit regarding an accident.

If you are comparing policies, you might find many insurance carriers abbreviating coverage amounts, such as 15/30 for limits of $15,000/$30,000.

The minimum limits required are $15,000 for the death or injury of any one person in a car accident and $30,000 for the deaths or injuries if multiple people are involved.

In California, property damage liability coverage of $5,000 is the minimum amount required by law. This pays for damage done to another person's property resulting from a vehicular accident, up to the limit. Similar to bodily injury liability coverage, property damage liability coverage will pay for legal costs if the insured driver is then sued in connection to a vehicular accident. 

A tort is an action or actions, either intentional or unintentional, that cause harm to another person and in which a court will hold a party liable.

California is a tort state, which means the driver needs to be found at-fault for their policy to pay for the damage. What this means is that the investigation needs to determine the fault before the insurance provider will initiate any payments.

One concept to keep in mind is that car insurance, in general, follows the vehicle that is insured. If you loaned your car to a friend, their car insurance policy is not effective in your car—if they get into an accident, your insurance will most likely be responsible.

Purchasing Minimum Coverage

The minimum coverage required is generally very low. Damage amounting to $5,000 is a relatively small amount of repairs. If you only carry the minimum coverage and cause $9,000 in damage to another vehicle, you are going to have to come up with $4,000 to cover the remaining costs.

Car insurance carriers often reward drivers with lower rates for carrying higher limits—also known as preferred limits of liability.

Sometimes you can go from a 15/30/5 limit policy up to a 100/300/100 limit policy for a few dollars more. It really depends on the insurance carrier, your age, and your driving history. You shouldn't request minimum limits, assuming that they will be the cheapest. Have your agent quote you different limits so you can see the difference in cost for yourself.

The Penalties for Driving Without Car Insurance

Californians are required to have insurance only with companies that report electronically to the Department of Motor Vehicles. This means that every vehicle had insurance upon registration—it also means that a driver who does not have insurance did not continue paying for it, or canceled the coverage.

If you cannot afford to pay your insurance premiums and are involved in a car accident that is not covered by car insurance, your driver's license could be suspended. Additionally, if you are stopped by a police officer for whatever reason, you could face tickets and/or fines for being uninsured—in some cases, your license and registration might be suspended as well.

Having Insurance Is the Responsible Thing to Do

Having automobile insurance isn't just a legal requirement—it is also the responsible thing to do. Auto accidents cause property damage and bodily injury—the costs for both add up quickly.

The consequences are not only suspension, fines or other legal actions against the uninsured driver; the injuries and damages caused by an uninsured driver may not be fully covered by a policy, causing further damages to someone and their way of life—they may need to fund repairs or medical procedures on their own, draining their savings or retirement accounts.