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Financial Responsibility at the DMV

What is Financial Responsibility?  In 1974, the California State Legislature came to the startling realization that California was leading the Nation in the number of traffic collisions. The numbers of people injured in was staggering and the monetary loss in property damage was in the hundreds of millions of dollars. More disturbing was the fact that large numbers of the people who suffered these injuries and property losses were not being compensated because so few drivers carried liability insurance.

In response to this problem, the California State Legislature passed a series of laws designed to compel drivers and owners of motor vehicles to maintain and prove proper liability coverage for their vehicle at the scene of a traffic collision.

Today, it is unlawful for any person to drive or own a motor vehicle that is operated on a public street or highway, if it is not covered by proper insurance (or other form of Financial Responsibility).

In short, California’s compulsory auto insurance laws demand that all vehicles be insured; otherwise the driver and/or owner of a motor vehicle may have their driver license suspended.

What forms of Financial Responsibility does the DMV recognize?

California Vehicle Code section 16021

This section of the Vehicle Code identifies four acceptable forms of Financial Responsibility:

  • The driver or owner is “self-insured.” This requires that the driver or owner possess a “certificate of self-insurance” which is issued by the DMV;
  • The driver or owner presents proof of “cash deposit” on a form issued by the DMV;
  • The driver or owner presents proof of liability insurance from an insurance company licensed to do business in California;
  • The driver presents proof that the vehicle is owned, or leased under the direction of, the United States, or another public entity.

Special Note: Some out-of-state insurance companies are not licensed to provide auto insurance coverage in the State of California. If you are visiting California, or have just recently moved here, you should contact your insurance provider to confirm that your insurance policy is acceptable under California law.

 What happens if I can’t show proof of Financial Responsibility at the scene of an accident?

First of all, remember that a reportable accident is one that involves property damage greater than $1000, any injury, or death. If this applies in your case, then the law requires that you provide proof to the other parties involved, or to a police officer, that the vehicle is properly insured.

If you were driving a motor vehicle involved in a “reportable” traffic collision, and if the vehicle was not properly insured at the time, you are not subject to arrest, however, it is likely the DMV will learn of the violation and act to suspend your driver license.

Normally, the DMV will learn that you did not prove Financial Responsibility, by notification from one of these sources:

  • One of the parties involved reports the traffic collision to the DMV on an SR-1 Form and indicates that you were not insured;
  • An insurance company notifies the DMV that a reportable traffic collision occurred and that you were not insured;
  • A law enforcement officer files a report with the DMV indicating you were not properly insured.

When the DMV learns that a reportable traffic collision occurred and that you may not have been properly insured, the department will immediately initiate the process to suspend your driver license. The DMV process begins automatically and does not wait for any additional proof. A “Notice of Suspension/Revocation” will be mailed to the accused person’s last known address advising that a suspension action has begun. That same notice will offer the accused person an opportunity to schedule an administrative hearing to reverse the intended suspension of the driver license.

If you have received a Notice of Suspension/Revocation because the DMV suspects you owned or drove a motor vehicle that was not properly insured, call the DMV Defense Experts at California Drivers Advocates (CDA). Our team of former police officers, DMV Hearing Officers, investigators and scientists has handled every form of license suspension hearing at the DMV.

While the DMV process can be frustrating and confusing, it can be properly navigated by an expert with the proper training and experience. Don’t fight the DMV on your own. Call CDA today, we can help.

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