Every state in the union has a financial responsibility law. Early on, all lawmakers decided everyone aspiring to be a driver should prove he or she had the financial muscle to meet liability claims should there be an accident. With California being an at-fault state, the principles of negligence decide which driver is the most immediate cause of the loss and damage. That driver then has the responsibility of paying all the compensation ordered by the court. Just as many shops have a sign at the entrance warning people, “If you break it, you bought it.” so there’s a mandate for all drivers. Before you get behind the wheel, you must have:
• a valid car insurance policy for 15/30/5; or
• have posted a $35,000 bond; or
• have deposited $35,000 in cash with the Department of Motor Vehicles; or
• be the holder of a certificate of self-insurance issued by the DMV.
If you present yourself at the DMV to renew your vehicles registration, or you are cited for a traffic violation, or you are involved in an accident, you are required to produce proof you are complying with the mandate. If you fail to produce this evidence, there are fines and your driver’s license can be suspended. If you produce fake evidence, fines and jail time beckon plus a one-year suspension of your driver’s license. For the record, you have ten days of the date of any accident involving personal injuries or damage to property of more than $750 to report the accident to the DMV. The penalty for failing to report is suspension of your driver’s license for up to four years.
When you are in the market for car insurance, Assembly Bill 2677 of 2005 requires auto insurance companies to give you a quote at the lowest possible end of the range given your age, gender, the make and model you want to drive, and your driving record. All insurers must maintain a toll-free number or run an online presence giving transparent quotes. The Insurance Commissioner also polices the rates charged to ensure all consumers get the best possible deal. This follows on from Proposition 103 which imposed tough regulations on the car insurance industry in California. As a result, in real terms, the cost of insuring a vehicle has fallen over the last twenty years. This is the only state in which there has been a fall. If you feel you have not been treated fairly either in the annual rate quoted or the handling of a claim, the Commissioner runs a complaints process. If your complaint is found justified, the Commissioner will fine the insurer and pay you compensation.
The statistics show teen drivers are significantly more likely to crash and make claims. As a result, the car insurance industry routinely charges inexperienced drivers higher annual premium rates. Only when a driver reaches the age of 25 can he or she expect the rates to grow more affordable. So as a teen looking for cover, the best approach is:
• to drive an underpowered make and model rated safe by both the NHTSA and the IIHS;
• to drive with safety uppermost in your mind — the longer you go without an accident, the more quickly your rate will drop;
• take all the driving courses recommended by your insurer; and
• maintain a high GPA.
Only then will you earn the discounts to bring the annual car insurance quotes down into the truly affordable range.
There are more than 5.5 million people aged 55 and over who drive on a regular basis. More than 2.5 are aged 70 and over. The Insurance Commissioner accepts the medical conclusion that the aging process causes both mental and physical changes which can affect driving skills. This does not mean older people automatically become poor drivers. As evidenced by the crash statistics, the majority continue to be very safe up to the age of 75. This does not change the need to monitor performance, particularly if health issues require taking medication. This suggests older people should have regular eye exams and that it can be wiser to limit driving at night. Car insurance companies prefer seniors to go through one of the approved mature driver improvement programs offered by one of the driving schools licensed by the DMV. If seniors act reasonably and, where appropriate, adapt their vehicles so they are safer to drive, the annual car insurance rates will be kept low. But if the older driver picks up tickets and makes one or more claims, the rates are likely to rise. After 75, the rates will begin to rise regardless of the track record.
Despite the tough regulations, the cost of cover is the sixth most expensive. This is based on a comparison of the rates charged a hypothetical 40-year-old man. The fact the rates remain expensive is evidence of how overpriced car insurance used to be in the state. To give you a guide price, the site run by the Insurance Commissioner provides an auto insurance survey. You input your location, the type of cover you want, the number of years you have held a license, your annual mileage and a choice of four sample makes and models. The results for a 40-year-old man in Burbank, LA, driving 12,500 to 15,000 miles a year with a clean license show a minimum annual rate of $1,313 and a maximum of $4,181. A 40-year-old woman in Fair Oaks, Sacramento, driving 12,500 to 15,000 miles a year with a clean license would pay a minimum of $1,034 and a maximum of $3,903. These are not formal quotes. Only licensed auto insurance companies or their agents are allowed to issue formal quotes. But they give you a clear indication of the range of rates you are likely to face. It’s then up to you to shop around to find the insurer who will give you the cover you want at a price you can afford.