Featured Expert
Chris Cochran
Chris Cochran CA Office of Traffic Safety View bio

This guide was written by

MoneyGeek Staff

California is a beautiful state, but its big cities suffer some of the worst traffic snarls in the country. Drivers in Los Angeles spend 80 hours a year stuck in traffic, just two hours more a year than drivers in San Francisco and Oakland, according to a 2015 report by Texas A&M Transportation and INRIX Inc. Read on to find out all about car insurance, driving laws and road safety in the Golden State.

What Does California Require for Vehicle Insurance?

Summary

Since the late 1980s, California has tightly regulated the auto insurance market, creating consumer protections and savings that few other states can match.

All drivers must have auto insurance or show other proof of financial responsibility. The state also requires insurance companies to give “Good Driver Discounts” of 20 percent to certain drivers who avoid accidents and moving violations. To qualify, you must:

  • Have been licensed to drive for the past 3 years
  • Have no more than one point on your record for a violation
  • Not have taken traffic school more than once for a violation
  • Not be at fault in an accident causing injury or death

According to a report by the Consumer Federation of America, California’s auto insurance regulation and its “Good Driver Discount” have led to $100 billion in savings for motorists since 1989. In fact, California is the only state that saw automobile insurance costs go down between 1989 and 2010.

Even so, an estimated 14.7 percent of California drivers, or 4.1 million residents, were uninsured in 2012, according to the Insurance Research Council.

Who Needs Vehicle Insurance in California?

Any car that is registered, driven, or parked on the street in California must be insured, according to the California Department of Motor Vehicles (DMV). Even your 1967 Camaro that sits in the garage will need insurance if you want it registered or if you ever want to take it for a spin.

If you drive your car very little, though, you may qualify for a low-mileage discount or a “pay as you drive” insurance.

Proof of Insurance

All California drivers must keep proof of insurance with them while they’re driving, or proof of an alternative (see below). Your insurance company should provide you with an insurance card, which will contain information about your policy and the car(s) covered. You can carry this on paper or on a mobile device, and it must be presented when:

  • The police or another law enforcement officer asks for it
  • You renew your vehicle registration
  • You are in a collision

Minimum Liability Insurance Requirements

At a minimum, you must have liability insurance, which covers costs related to injuries or damage you might cause in a car accident. The minimum level of coverage is:

  • $15,000 for injury/death to one person
  • $30,000 for injury/death to more than one person

But that’s the bare minimum. Insurance experts often recommend carrying ten times this amount (See below: “How Much Insurance Do I Need?”).

Most drivers purchase auto insurance to cover their financial liability, but the California DMV offers a few alternatives:

  • A cash deposit of $35,000 with the DMV
  • A DMV-issued self-insurance certificate (which requires even larger reserves)
  • A surety bond for $35,000 from a company licensed to do business in California

These alternatives require significant cash reserves, and the entire reserve can be wiped out with one accident. That’s why most people stick with insurance.

What Happens If You Drive Without Car Insurance in California?

If you are pulled over and don’t have proof of insurance, you may be fined $100 to $500, and you may have your vehicle impounded until you get insurance. If you get in an accident and don’t have insurance, you may lose your driver’s license for up to four years.

You can cancel your car insurance for a vehicle that you no longer drive by filing an Affidavit of Non-Use (ANU) with the DMV at least 75 days before your registration is suspended. After filing an ANU, you’re free to cancel your insurance and suspend the vehicle’s registration. If you decide to re-insure your vehicle within the same year, you can remove the affidavit.

How Much Vehicle Insurance Do You Need?

California law requires only that you have liability insurance, which covers injuries to other people or property damage to others.

But cheap car insurance isn’t always the best car insurance. According to the Insurance Information Institute, insurance experts and consumer advocates recommend carrying liability coverage of $100,000 per person and $300,000 per accident. Some experts recommend carrying uninsured motorist insurance as well.

What Percentage of Drivers in
California Lack Vehicle Insurance?
14.7% National Average: 12.6 %

If you have a loan for a new car, the insurer will require that you purchase collision and comprehensive insurance. You may also want to carry it if you’re purchased a relatively new car for cash. On the other hand, if your car is worth less than your deductible and a couple years’ worth of premiums, you might want to forgo that insurance.

See MoneyGeek’s guidebook to car insurance for more about how to buy the best car insurance for your needs.

California’s Low-Cost Insurance Program

Drivers who can’t afford market-rate insurance may qualify for the California Low Cost Automobile Insurance Program. To qualify, you must:

  • Be at least 19
  • Be a California resident with a valid California driver’s license for at least 3 years
  • Own a car worth less than $25,000
  • Have a limited income (up to about $29,425 for a single person, or $60,625 for a family of four)
  • Qualify as a “good driver”

California drivers who have tried to get insurance but have been turned down because of their driving record or other factors should be able to get insurance through the California Assigned Risk Plan (CAARP).

Car Insurance and Special Groups

Teen Drivers in California

Studies show that teens are much higher-risk drivers than adults, so expect your car insurance premium to jump when your teen starts driving. It’s generally cheaper to add your teen to your own policy rather than have a separate policy, but your policy could still skyrocket. MoneyGeek analyzed high- and low-cost California car insurance policies to show just how widely policies vary — and what you can do to lower your costs.

California Car Insurance: The Difference a Teen Makes

Median annual price change for families with a teen driver on their policy:

$2,276 increase This is a difference of 95%.
Comparison of Premium Ranges
25th – 75th Percentile Median
Watch Your Speedometer

Average annual premium increase if your teen gets a speeding ticket while driving 11-15 mph over the speed limit:

Male teen

$1,242

Speedometer
Female teen

$904

Check Out Discounts for Teens in California

Impact on annual premium with Good Student and Defensive Driving discounts:

$620 saved

Premiums from California Insurance Providers

Policy cost vary more than you may think, so shop around. Check out the annual average premiums for a married couple and a 16-year-old teen driver in California:

Insurance Provider Min MEDIAN MAX
Mercury $1,664 $3,420 $10,040
Auto Club $2,335 $4,280 $8,043
State Farm $2,177 $4,497 $9,584
Allstate $2,142 $4,559 $16,470
CSAA $2,849 $5,373 $11,091
Farmers $4,089 $9,558 $29,873

California Premiums: Mustang vs. Minivan

Do insurers consider sports cars a more risky choice for teens than sedans and minivans? Definitely, according to industry insiders — and premium rates reflect it.

Average premium for two 2014
Mustang GTs

$6,787

Average premium for two 2008
Town and Country Limiteds

$4,782

Annual benefit of minivans:

$2,005 saved This is 30% less expensive.
Premium Comparison for Two Adults + 16 Year Old
25th – 75th Percentile Median

College Drivers in California

If your child is heading off to college, it’s a good time to talk with your insurance agent about how these changes will affect your insurance coverage. If your child doesn’t plan on driving at college, you may be able to save some money. If she is commuting long distances, you may want to consider increasing your coverage. Full-time college students with a B average or higher may also qualify for a Good Driver Discount.

College vs. High School Drivers in California

Median annual premium change with a college student vs. high school driver

$1,200 decrease This is a decrease of 25%.
Comparison of Premium Ranges
25th – 75th Percentile Median

Annual Premiums for California Insurance Providers

Each year, take a look at your policy before it renews to see whether you could get a better deal. Case in point: Here are the average premiums for a married couple and a 19-year-old college student in California.

Provider Min MEDIAN MAX
Mercury $1,262 $2,396 $5,486
State Farm $1,698 $3,489 $6,828
CSAA $1,928 $3,670 $6,586
Allstate $1,841 $3,605 $10,696
Auto Club $2,335 $4,280 $8,043
Farmers $3,724 $7,334 $16,307

California College Drivers: Distance Discount

You may see a slight break in your family’s premium if your student lives 150 miles away from home.

Average premium for a 19-year-old male
  • $4,712 at home
  • $4,622 at school
  • $90 in savings
Average premium for a 19-year-old female
  • $3,888 at home
  • $3,815 at school
  • $73 in savings

College Students in California: Mustangs vs. Minivans

Your college student driving a minivan will cost less than if he or she drives a sports car — a reflection of the lower risk to insurers.

2014 Mustang GTs (2)

$5,226

2008 Town and Country Limited minivans (2)

$3,654

Annual benefit of minivans

$1,572 saved This is 30% less expensive.
Premium Comparison for Two Adults + College Driver
25th – 75th Percentile Median

Military Drivers in California

California is home to 162,820 active duty military personnel and more than 1,851,000 veterans. In California, some insurance companies offer car insurance exclusively for servicemembers and vets, while other companies offer them discounts. However, a good driving record is still required to get a price break.

USAA, which caters to veterans and enlisted personnel, offers discounts for a five-year clean driving record and for insured vehicles less than three years old. AFI (Armed Forces Insurance) also sells policies exclusively to veterans, active duty military, and their spouses or surviving spouses.

California Service Members:
How Vehicle Choice Affects Your Premium

Rollover crashes are more common among SUVs and pickups, according to the Insurance Information Institute, but an older model SUV still has less impact on your premium than a recent model sports car.

Comparison of Premium Ranges by Driver Age and Vehicle for a Military Driver
25-Year-Old Driver
50-Year-Old Driver
25th - 75th Percentile Median

Age Savings for California
Service Members

Median auto insurance
for service members:

$1,743
Male (25 yrs)$2,274
Male (50 yrs)$1,704
$570 savings
Female (25 yrs)$2,127
Female (50 yrs)$1,698
$429 savings

Compare Average Premiums Available to California Military Personnel

Whether you're in the military or not, it pays to do some comparison shopping. Check out the average annual rates you can get in California.

Premium Comparison for a Military Driver
25th - 75th Percentile Median

Seniors in California

If you are 55 or older, look into taking a DMV-approved mature driver improvement course. If you successfully complete one, most auto insurance companies will give you a discount on your premium for up to 3 years.

After age 70 you cannot renew your driver’s license by mail in California. You will need to go to the DMV and take a vision test. You may also have to take written and driving tests.

Undocumented Workers in California

California is one of about a dozen states, along with the District of Columbia, that allows residents to obtain driver’s licenses – a prerequisite for car insurance — no matter what their immigration status is.

As long as you can provide acceptable proof of identity (e.g. a passport or national identification card from your country of origin) and proof of residence, and you meet the other licensing requirements, you can apply.

During the first year the law was in effect in 2015, more than 605,000 undocumented immigrants received licenses, according to the California DMV.

Ridesharing Insurance in California: Are You Covered?

Uber, Lyft, Sidecar and other “ridesharing” companies use mobile technology to connect passengers to drivers. But personal car insurance policies usually exclude coverage for business use or “driving for hire,” leaving many rideshare drivers vulnerable. Also, passengers may not be fully covered in the event of a crash, as they would be in a taxi.

If you’re a ridesharing driver:

Although insurance from ridesharing companies provides contingent coverage, some of the insurance may not kick in until the driver picks up a fare. In July 2015, California passed a law that addresses some of these concerns.

California’s new law requires ridesharing companies to inform their drivers that their personal auto insurance policy does not apply while on assignment. It also requires that the company have $1 million in liability coverage from the time a driver accepts a fare until the passenger exits the vehicle. In the period when a driver is available but doesn’t have a fare lined up, the company must have at least $50,000 per person/$100,000 per accident/$30,000 property damage coverage. It must also carry $200,000 in excess insurance in case liability exceeds these limits during this period.

Car Accidents: How to File a Claim in California

If you are involved in a car accident, you are required by law to stop and exchange information (including license, registration and insurance information) with the other driver. If you hit a parked car, you should try to find the owner. If you can’t you must leave your name, address, and an explanation of the accident in a conspicuous place.

After any accident you should notify the police or California Highway Patrol as soon as possible, and then notify your insurance company. You must also notify the DMV within 10 days if there is more than $750 in damage to either car, or if anyone is injured or killed.

Your insurance company will help you through the process of filing a claim and determining fault.

Best and Worst States for Driver Safety: How Does California Rank?

California has a better than average driver safety record. It ranked 17th in the country in terms of overall safety in MoneyGeek’s analysis of highway safety data. But speeding is involved in nearly a third of its fatal crashes, according to data from the National Highway Traffic Safety Administration, and 29 percent of fatal crashes involve alcohol.

California Driver Safety Ranking

17th in the U.S.
About Our Data

The driver safety table shows the different safety factors that contribute to your state's overall safety rank (in the green box). The overall safety ranking and the National Ranking column scores in each category (including crash fatality rates) are from safest to most dangerous, with 1st being the safest and 51st the least safe.

How did we create the safety rankings?

We created a traffic safety ranking of all US states plus the District of Columbia by combining data from the National Highway Traffic Safety Administration and the Insurance Institute for Highway Safety. We looked at fatality rates by distance traveled as well as by population and gave more weight to behaviors that were riskier and preventable (i.e., drunk driving, not using a seat belt), as well as to accidents that involved more than one party (i.e., multi-vehicle).

Driver Safety Profile Number of Fatalities Fatality Rate

The fatality rate is the rate per one billion vehicle miles traveled, except for pedestrian and bicyclist fatality measures, which are per measured per a population of 100,000.

Ranking
(National)

Rankings are in order of safest to least safe. A state with the lowest fatality rate would be the safest, and thus ranked #1.

Drunk Driving-Related Fatalities 870 2.64 11th
Speeding-Related Fatalities 961 2.92 23rd
Passenger Vehicle Unrestrained Fatalities 500 1.52 4th
Unhelmeted Motorcycle Fatalities 34 0.10 13th
Multiple Vehicle Fatalities 1,193 3.62 13th
Pedestrian Fatalities 701 1.83 43rd
Bicyclist Fatalities 141 0.37 49th
Total Vehicle Fatalities 3,000 9.10 11th

Sources: National Highway Traffic Safety Administration, Insurance Institute for Highway Safety

California: Protecting You from Injury on the Road

When it comes to driver safety, California has some of the nation’s more restrictive traffic safety laws. “California is one of the highest ranked states when it comes to avoiding crashes,” says Chris Cochran of the state’s Office of Traffic Safety. “Our mileage death rate [deaths per mile driven per year] is about 15 percent lower than national average.”

Cochran notes that impaired driving is still a major cause of accidents on California roads. Even if an impaired driver is fortunate enough to avoid injuring himself or others, a DUI arrest can be hugely expensive. “The biggest hit you’re going to take is in your car insurance, and it will last for years and years,” Cochran says.

Safe Driving Laws – California

  Requirement State Law Details
seatbelts Mandatory seatbelts Max fine for first offense $162
child seat Child passenger safety < 2 years (and < 40 lbs and < 40″) in a rear-facing infant seat (eff. 1/1/2017); and kids < 8 years of age or < 4′ 9″ need to use a front facing booster or car seat
DUI Driving under the influence (DUI) 4-month license suspension for first offense, fine, treatment program, community service
ignition interlock Ignition interlock after DUI (in some counties) Mandatory for all convictions in Alameda, Los Angeles, Tulare and Sacramento counties (pilot project)
cell phone Talking on cell or texting while driving Banned for all drivers. 2013 saw 426,000 handheld cell phone and texting convictions
young drivers Protections for young drivers Graduated driver’s license. No passengers under age 20, and no unsupervised driving 11 p.m. to 5 a.m. during a driver’s first year
motorcycle helmet Motorcycle helmet law Universal requirement
bicycle helmet Bicycle helmet law Partial Required for those under 18

Source: Governors Highway Safety Association, 2016

Car Insurance Resources for California Residents

Department of Motor Vehicles (DMV)

Access information on insurance, registration and licensing requirements.

California Department of Insurance

Access basic information, learn about insurance programs, and file insurance complaints.

California Office of Traffic Safety (OTS)

Find resources and statistics regarding state traffic safety laws and results.

Automobile Assigned Risk Plan (CAARP)

If you are a high-risk driver and have trouble purchasing auto insurance on your own, contact CAARP.

California Bicycle Coalition

The CBC includes information on what to do in the event of a car-bike accident.