Empowering California Drivers

To Maintain Their Driving Privilege

Financial Responsibility Hearings

What is Financial Responsibility with the California DMV?

In 1974, the California State Legislature passed a series of laws intended to compel all California Drivers to maintain the means compensate anyone suffering damages, injuries or death associated with the operation of a motor vehicle.  For decades, if the parties involved in a motor vehicle accident were not wealthy, there was no hope of recovering losses associated with a traffic accident.  By passing the Financial Responsibility Laws, it was the Legislature’s intention that anyone suffering losses in a traffic accident had some way to make themselves whole again.

How Do Drivers Find Out The DMV is Taking Action for Financial Responsibility?

If the DMV suspects that a person either owned or operated a motor vehicle involved in a traffic accident that was not covered by proper Financial Responsibility, the department will initially send a notice to the involved party asking them to provide proof that they were properly covered. Known as a Courtesy Reminder, this notice advises the involved party that the DMV suspects they have been involved in a reportable traffic accident and that they did not possess evidence of Financial Responsibility.  The Courtesy Reminder provides the involved party ten days to demonstrate proof of Financial Responsibility.


If the involved owner or driver of the motor vehicle ignores the Courtesy Reminder and does not provide proof of Financial Responsibility, the next notice received in the mail from the DMV will be an Order of Suspension.  This order will tell the involved party the DMV has begun the process to suspend their driver license and will also document the date the suspension goes into effect.  This notice also tells the involved party they have a right to an Administrative Hearing to demonstrate why the suspension is not warranted, but they only have 14 days to properly request a hearing; otherwise the suspension will automatically go into effect.

All notices and other correspondence provided by the DMV are sent by US Mail.  The DMV does not make contact with involved parties by telephone, fax or email.  This is one of the reasons it is so important to ensure the DMV has your current address.

How Did the DMV Find Out I Didn’t Have Proper Coverage?

The California Department of Motor Vehicles (DMV) is hardwired into the fabric of our society and therefore they receive information on drivers from a variety of sources.  Following a “reportable traffic accident” the California DMV will generally learn that one of the parties did not have proper auto insurance through three sources:

  • Report of Traffic Accident in California (Form SR-1):  All persons involved in a traffic accident involving injury, death or damages exceeding $750 must report the incident to the California DMV within ten days.  If any person files an SR-1 form that indicates any involved party was not properly covered by Financial Responsibility, the DMV will initiate an investigation.
  • Notice From Insurance Companies:   If any driver files a claim with their insurance company to recover damages or losses suffered in a traffic accident, and if the insurance company learns that other parties involved were not covered by Financial Responsibility they will report that information to the DMV who will initiate an investigation.
  • Law Enforcement Report:  If a law enforcement officer investigates a traffic accident and discovers that any party involved did not possess evidence of Financial Responsibility, he or she will report the information to the DMV and the department will initiate an investigation.

Why is the DMV Taking This Action Against Me?

The purpose of California’s Compulsory Financial Responsibility Laws is to ensure that all persons involved in a traffic accident would have some means to be financially compensated for any pain, suffering or damages.  Up until 1974, scores of people were injured or killed in traffic accidents, and millions of dollars of property damage was inflicted on innocent people.  In most of those instances, there was no way for them to recover any compensation to help restore them to being whole.

The California Legislature designed these laws to be compulsory, that means they are non-negotiable.  Being able to provide proof of Financial Responsibility is a condition of holding a California Driver License—It is not discretionary.  Basically, if you want to own or operate a motor vehicle in the State of California, you must be able to compensate another person for loss by holding evidence of Financial Responsibility.

If the California DMV is taking a suspension action against you for Financial Responsibility, it is because you have been involved in a “Reportable Traffic Accident” and did not have proper auto insurance; or some other means to compensate a loss.  The California Legislature designed these laws to be blind to the facts.  This means that fault in the accident is not relevant.

Are There Options to Maintain the Ability to Drive?

If the DMV initiates a suspension action against a person for Financial Responsibility, he or she will have the opportunity to defend themselves at what is called a Financial Responsibility Hearing. These hearings are run like mini-trials where the accused is permitted to present evidence and witnesses in their defense.  It should be noted that the DMV does not automatically provide hearings for drivers/vehicle owners in this situation but rather the responsibility of that person to initiate their defense by requesting a Financial Responsibility Hearing. DMV Administrative Advocates are familiar with the process of requesting hearings the timelines associated with them and may provide a better chance in defending you and maintaining your ability to drive in California.

The Financial Responsibility Hearing Overview.

The Financial Responsibility Hearing is run much like a mini-trial.  Evidence is introduced, objections are waged, witnesses testify and arguments are heard.  The assigned DMV Hearing Officer must make findings on the following questions:

  • Was the accused person the owner or driver of a motor vehicle involved in a reportable traffic accident where another person was injured or killed?
  • Was the accused person the owner or driver of a motor vehicle involved in a reportable traffic accident where any damages exceeded $750?
  • At the time of the reportable traffic accident, did the accused owner or driver have evidence of current Financial Responsibility?

If the Hearing Officer decides that such an accident occurred and the accused owner/driver did not have valid insurance, the driver license will be suspended.

Financial Responsibility Summary

If the California DMV suspects you were in an accident without proper coverage they will send a courtesy notice. You can respond or do nothing. If you have valid proof of coverage you can end the process by sending proper documents to the DMV. If you do nothing they will continue the process to suspend your license by sending you a Notice of Suspension. If you do nothing your license will be suspended. If you want to defend your ability to drive you can request a Financial Responsibility Hearing. DMV Administrative Advocates can assist with your defense and provide a better chance for success.You can also learn more and see a complete start to finish overview of the financial responsibility procedure  here.

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