What is financial responsibility law?

Written on behalf of Abramson Smith Waldsmith LLP

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When you hear the term “financial responsibility,” it may bring to mind bank accounts, savings and balancing checkbooks. However, under California law pertaining to motor vehicles and motor vehicle accidents, financial responsibility actually refers to the financial responsibility a driver undertakes each time he or she is behind the wheel of an operating motor vehicle.

In other words, financial responsibility refers to car insurance. The State of California Department of Motor Vehicles discusses financial responsibility as a compulsory law requiring all owners and operators of motor vehicles to obtain appropriate insurance coverage to account for any financial liability involved in accidents resulting in property damage or personal injury, including catastrophic personal injury. Your license can be suspended if you do not obtain insurance and provide proof of said insurance. If your license is suspended, you have the right to petition for a financial responsibility hearing to restore your license privileges. 

The law also extends to cover many other areas, including a driver’s obligation to report any accident he or she is involved in within 10 days of the accident if the accident involved injury or death of another party, or if the accident involved damage to property valued at more $1,000 or more. If you were involved in a motor vehicle accident that meets these criteria, your accident report must be submitted to the state Department of Motor Vehicles. Failure to submit this report may result in penalties or difficulties with insurance claims.

This information is intended for reference purposes only, and should not be considered actionable legal advice.


Jeffrey R. Smith

Jeffrey R. Smith

Managing Partner

Robert B. Waldsmith

Robert J. Waldsmith

Partner, 1999

William B. Smith

William B. Smith

Partner, 1978

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