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What are the penalties for failing to prove Financial Responsibility at the DMV?

What causes the DMV to suspend a license for Financial Responsibility?  In 1974, the California Legislature passed a series of laws making drivers and owners of motor vehicles financially responsible for any damage, injury or death caused in a traffic accident. Found in sections 16000 through 16078 of the California Vehicle Code (CVC), these laws are compulsory, they are not discretionary. This means that for any person who wishes to own or operate a motor vehicle in the State of California, they must possess the ability to prove Financial Responsibility to pay for damages, injury or death; otherwise their driver license will be suspended.

Even if it is proven that you are 100% not at fault in the traffic collision, you are nonetheless required to maintain Financial Responsibility.

If you drive a motor vehicle, whether you own it or not, you must be able to prove Financial Responsibility for any vehicle you drive. If you own a vehicle but allow others to drive, you must be able to prove Financial Responsibility.

If you are involved in a reportable traffic collision and it is discovered you did not possess proof of Financial Responsibility at the time, the DMV is mandated to suspend your driver license.

What must I do following a traffic accident?

If you are involved in a “Reportable Accident,” you must report the incident to the Department of Motor Vehicles (DMV) within 10 days of the event. Whether or not you were at fault in the accident, CVC section 16000(a) makes it mandatory that you report the incident to the DMV by filing a specific report. Known as a Report of Traffic Accident Occurring in California, the SR-1 Form is available at any DMV Field Office or at

The California Vehicle Code defines a “Reportable Accident” as any incident involving the operation of a motor vehicle that results in:

  • Any injury or death to any person,
  • The damage to the property of any one person exceeds $1000.

California Vehicle Code section 16000.1(a) makes it mandatory that “off-highway” traffic accidents be reported unless the damage occurs only to the property of the driver or owner of the motor vehicle and there is no bodily injury or death.

If you are involved in a Reportable Accident while driving an employer’s vehicle, you must report the incident to your employer within 5 days and then he or she must report the accident to the DMV within 10 days.

What are the Penalties for failure to maintain Financial Responsibility?


If you were operating a motor vehicle involved in a Reportable Accident and that vehicle was not properly insured at the time, the DMV is mandated to suspend your driver license for one year. If this occurs, you will not be eligible for the full re-instatement of your driving privilege until that one-year period has lapsed. To be eligible for full re-instatement of your driving privilege, you must also maintain proof of Financial Responsibility with the DMV for a period of 3 years. This form of Financial Responsibility normally requires the filing of an SR-22 form. If your SR-22 form is cancelled at any point during the three year period, the suspension will be re-imposed.

If your personal driver license has been suspended for Financial Responsibility, but your employment requires that you drive to perform your duties, CVC section 16073 determines that you may legally drive your employer’s vehicles during the course and scope of employment, provided the vehicles are not registered in your name. This provision does not apply to commercial drivers.


If your driver license has been suspended for one-year for Financial Responsibility, you may apply for a restricted driver license under one or more of the following cases:

  • When you must drive to and from, and during the course and scope of your employment;
  • When you must drive to and from medical treatments for a serious medical condition, or when you must transport an immediate family member to and from such medical treatments;
  • When you must drive a child (grades K-12) to and from school, and no other viable means of transportation exists.

The affected driver must file a California Insurance Proof Certificate (SR-22 or SR-1P) and must pay a penalty fee of $250. In some instances an additional $55 re-issuance fee may be required. The driver must complete and file an application for a restricted driver license with the DMV. If approved, the restriction will remain in effect for the entire one-year period of suspension.

After one year the suspension/restriction ends and the driver is eligible for full re-instatement of their driving privilege provided they maintain Proof of Financial Responsibility for the remainder of the three-year period. Eligibility for Restricted driving privileges do not apply to commercial drivers.

How can I prevent the Suspension or Restriction of my driver license?

If you have received an “Order of Suspension” from the DMV because they believe you have violated California’s compulsory Financial Responsibility Laws, you only have three options:

  • Take no action and suffer a one-year loss of your driver license. This will cause an increase in insurance rates as you must purchase and file an SR-22 Form.
  • Accept the one-year suspension and then apply for a restricted license. This will require an application for restricted license, a $250 fine and the purchase of an SR-22 Form.
  • Schedule, conduct and hopefully win a Financial Responsibility Hearing at the DMV.

If you choose to defend yourself and to fight the DMV to prevent the suspension of your driver license, the most important first step you can take is to telephone the DMV Defense Experts at California Drivers Advocates. Our team of former police officers, DMV Hearing Officers, Investigators and scientists have been fighting and winning all forms of Administrative Hearings at the DMV for years. Call CDA today, we’re ready to go to work for you.

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