The majority of states in the U.S. do not follow the No Fault law and California is one that does not. The Golden state, along with most of the other United States implement what is called the Financial Responsibility law. No Fault is a type of system that requires motorists to carry Personal Injury Protection (PIP) which ensures that the policyholders have compensation for their bodily injury no matter who is found liable for causing a traffic accident. _
What is the California Car Insurance Financial Responsibility Law?
Unlike the "No Fault" states, CA requires motorists to carry policies which secure compensation for the injuries to other parties and/or damages to the property of others. It does not require residents to have coverage for their injuries or protection covering their vehicle. The main goal behind the financial responsibility law is to ensure that operators have a means to pay for any damages that they may cause others while driving their automobile and to keep uninsured motorists off of the roadways.
The California auto insurance laws state that all motorists must carry the minimum liability limits at all times. These limits are as follows; $15,000 for bodily injury to one person, $30,000 for bodily injury to two or more people and $5,000 for property damage. Once the proper policy is purchased, the provider is required to notify the state's Department of Motor Vehicles (DMV). In addition, insurers are required to notify the DMV in the event that a person has had a cancellation and upon notification, the department will suspend the vehicle's registration until coverage is reinstated and they have received proof.
The state's minimum liability limits are rather low compared to the cost of medical care and the price of vehicle repair or replacement. For example, if an insured were to cause a collision with a vehicle that had a value of $20,000 and was considered a total loss, the insurer would pay the $5,000 stated on the policy and the policyholder would be held liable for the remaining balance due to the other party. It is strongly recommended that consumers consider raising their limits and purchasing more extensive protection when choosing coverage in order to protect them from incurring financial hardship in the event that an incident like this occurs.