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Understanding California's financial responsibility law

Most Californians understand that they must show proof of automobile insurance before they can obtain a license for their motor vehicle. On the other hand, very few motorists understand why such a requirement is imposed upon them. A recent truck accident in Los Angeles offers an answer to this question.

According to the police, a Dodge pick-up truck ran a stop light and collided with another pick-up truck, killing the driver and his passenger. The driver of the Dodge fled the scene but was later arrested by police. Under California's wrongful death statute, which we have discussed in other posts, the families of the two dead men have claims for damages against the driver of the Dodge truck. Unfortunately, such claims can turn out to be worthless if the persons who caused the accident have no assets to satisfy a judgment.

The California Financial Responsibility Law offers a partial solution to this problem by requiring that every person who wants to license a motor vehicle must demonstrate the existence of a valid policy of insurance on the vehicle for which the license is sought. The policy must provide liability insurance, that is, insurance that will pay claims for damages against the driver, in the following minimum amounts:

  • $15,000 for injury or death to one person
  • $30,000 for injury or death for each accident
  • $5,000 for damage to property

In the accident described above, the owner of the Dodge pickup was required to purchase liability insurance in order to obtain a license for the vehicle. If the families of the two dead men win their wrongful death cases, and the truck owner obeyed the law, the insurance company that issued the policy on the Dodge truck must pay those claims up to the financial limits specified in the policy.

The interpretation of automobile insurance policies can be very complex. Anyone who has been injured or lost a loved one in an accident may wish to consult a lawyer who specializes in accident cases for an analysis of the facts and law applicable to the case, an analysis of available liability insurance policies, and an estimate of the likelihood of recovering damages for medical expenses, lost income and pain and suffering.

Source: KTLA-TV, "2 Dead, 2 Taken Into Custody in Chatsworth Hit-and-Run Crash," Cindy von Quednow and Nerissa Knight, Oct. 8, 2016

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