Final answer:
In California, there are three forms of financial responsibility: liability insurance, a $35,000 cash deposit with the DMV, or a self-insurance certificate. They are meant to ensure drivers can cover costs in case of an accident.
Step-by-step explanation:
In California, there are three forms of financial responsibility: liability insurance, a $35,000 cash deposit with the DMV, or a self-insurance certificate issued by the DMV. These forms ensure that drivers are financially capable of covering the costs in case of an accident. Liability insurance is the most common form, where drivers purchase a policy that includes coverage for bodily injury and property damage liability.
For example, if a driver is at fault in an accident and causes injuries or damages to others, their liability insurance would pay for the medical expenses, property repairs, and legal fees. The minimum liability insurance limits in California are $15,000 for injury/death to one person, $30,000 for injury/death to more than one person, and $5,000 for property damage.
Overall, these forms of financial responsibility are put in place to ensure that drivers can fulfill their obligations in case of an accident and provide compensation to affected parties.