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Auto insurance requirements

mp3 #305 Auto Insurance: When You Must Have It (mp3 file)

Most drivers in California carry automobile liability and property damage insurance, in case they have an accident. However, a large number of drivers carry no auto insurance at all. Reliable estimates are that that from 20% to 25% of California drivers are uninsured motorists.

Since January 1, 1997, California law requires you to have auto insurance before you can obtain license tags for your car. California also requires every driver and owner of a car to have auto insurance or other allowed forms of financial responsibility. You must carry evidence of this in the vehicle at all times.

If you, as a driver, are stopped for a traffic violation or involved in an accident that causes more than $500.00 in property damage for any one person, or if anyone is injured, even slightly, or if anyone is killed, then you must show proof of insurance and report the accident to the California department of motor vehicles in Sacramento, on a department form, within 10 days of the accident. If you have a reportable accident, and you have no auto insurance, you may lose your California driver's license for a period of one year, or have your driving privileges restricted and incur fines even if the accident was not your fault. If your driver's license is suspended for one year, it will continue to be suspended another three years unless you show proof of financial responsibility to the DMV. This is normally shown by getting an auto insurance policy. If you do not keep your insurance policy in force for these three years, you will lose your driver's license again, until the three years have passed. This law also applies to residents of other states, who have reportable accidents in California, and who then drive in California.

The DMV may also suspend your driver's license, if a court enters a judgment against you for property damages of $500 or more, or for bodily injury or death, as a result of a vehicle accident where you were at fault, and you had no insurance. The suspension could continue if you do not pay the judgment, and if you do not obtain insurance.

Many drivers establish proof of financial responsibility, by purchasing a policy of at least $35,000 liability and property damage insurance from an insurance company. The minimum coverage is $15,000 for one injured person, $30,000 for two or more injured persons, and $5,000 for property damage.

If an insurance company or insurance broker refuses to issue such a policy to you, and if you make a written request for an explanation of the refusal, the insurance company or broker must provide you with a written statement, explaining its reasons for the refusal.

Once you have obtained motor vehicle liability insurance one year after a reportable accident, you are required to give to the department of motor vehicles a form from the insurance company, showing you are covered by liability insurance. You must continue your liability insurance for the next three years. If you drop your policy during these three years, your insurance company will notify DMV that your policy has been cancelled, and your driver's license will be immediately suspended by DMV. Your insurance coverage will continue until you either cancel it or decide not to renew it, or the company cancels the policy or refused to renew it. The company may cancel your insurance if you fail to pay the insurance premiums, or if your driving record has been unfavorable. The company's notice of cancellation must be sent to you at least 20- days before the effective date of the cancellation: however, if the cancellation is due to your failure to pay the premium, you are only entitled to 10 days' written notice. The notice must also include the reasons for cancellation. Your insurance coverage cannot be denied, solely because of your age, if you are a licensed driver.

If your insurance company does not renew your policy, it must also give you at least 30 days' advance written notice, with reasons for the non-renewal.

If your policy of motor vehicle liability insurance is cancelled or not renewed, other than for nonpayment of premium, the insurance company must notify you of your possible eligibility for liability insurance through the assigned risk plan. Under this plan, all insurance companies participate together, to share in the coverage of a driver who is deemed to be an "assigned risk."

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