Financial Responsibility and Suspension Laws

The Department of Motor Vehicles changed the way it verifies insurance for privately owned vehicles because of the new law passed in 2006. The changes were made for different reasons, such as to ensure that vehicles driven in California have liability insurance that provides coverage for damages and injuries caused by a collision accident regardless of fault, and also to lower the number of uninsured vehicles in California. One requirement that insurance companies in California have and need to follow is the electronic reporting of the private-use vehicle insurance to the Department of Motor Vehicles. This change allows the Department of Motor Vehicles to monitor insurance coverage of the vehicles and suspend registration on those vehicles that do not carry at least the minimum liability limits required by law. It is a mandatory requirement to carry evidence of financial responsibility in the vehicle at all times and provide it in case of being requested by law enforcement, when renewing a vehicle registration, and when the vehicle is involved in traffic collision. Additional insurance information may be needed in some cases, which needs to be provided. Examples of the additional information are a document or identification card from insurance company, a DMV authorization letter in cases if the insured is a depositor or is self-insured, California Proof of insurance Certificate that provides non-owner coverage or owner coverage and is also called SR22. In some cases the drivers must also have available such documents as evidence that the vehicle is owned or leased by a public entity or some additional insurance verification forms for the vehicles covered by a commercial or business policies, which are being registered for the first time.
There are different types of financial responsibility, such as a motor vehicle liability insurance policy, a cash deposit of $35,000 with the Department of Motor Vehicles, a DMV issued self-insurance certificates, and a surety bond for $35,000 from a company licensed to do business in California. California drivers need to make sure to carry one of the above mentioned financial responsibilities to avoid suspensions on their registrations. Vehicle registrations will be suspended if the Department of Motor Vehicles gets notified that a policy has been cancelled and a replacement policy has not been submitted within 45 days, when the insurance information is not submitted to DMV within 30 days of the issuance of a registration card upon initial registration and transfer of ownership, and when the registration is obtained by providing false evidence of insurance.

 

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