Are There Alternatives to Auto Insurance in California?
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Californians don't technically need to purchase and maintain an auto insurance policy in order to legally drive, but they must prove that they can be financially responsible for any car accident they may cause. Motorists in the Golden State have a few options when it comes to satisfying the state's financial responsibility laws, but most choose to buy coverage because they believe it's the most practical option. Residents who have the resources can decide not to purchase policies and instead either make a cash deposit with the Department of Motor Vehicles (DMV), obtain a DMV-issued self-insurance certificate, or get a surety bond from a licensed business.
Making a Cash Deposit
Californians who choose to make a cash deposit with the DMV will have to do so in the amount of $35,000. Not many have the luxury of being able to make such a large deposit, and there are pros and cons to choosing this option. Usually, if a motorist has this amount of money lying around, purchasing a policy wouldn't be a problem, but some feel that paying premiums for a product that they hope won't be used is just a waste of money.
Choosing to deposit cash will eliminate the need to pay premiums, but it can also leave the vehicle owner at risk of having to pay for damages and injuries out of pocket if the $35,000 is exceeded. Risking personal assets may not be worth going without a policy, and paying a premium to be covered for a much higher amount could be the better option.
Diligently comparison shopping can often lead to drivers's finding cheap car insurance in California with limits high above the $35,000. Industry experts suggest that motorists carry limits of 100/300/50 auto insurance, which will provide up to $350,000 for bodily injury and property damage instead of the $35,000 that would have been deposited with the state.
Getting a Surety Bond or Self-Insuring
Obtaining a surety bond may be an option, but, similar to a cash deposit, the protection is limited at $35,000.
The state also allows owners of 25 or more vehicles to act as a self-insurer if they possess the ability to pay judgments against them. This is done by getting a self-insurance certificate from the DMV rather than paying to insure 25-plus cars.
Most Just Purchase a Policy
California drivers do have alternatives to California car insurance, but, in the majority of circumstances, purchasing car coverage is considered the better choice and for many is the only option available to legally drive. Before consumers in CA decide to go without an auto policy, they should make the decision carefully and fully understand what risks they are taking by choosing an alternate route to comply with financial responsibility laws.