Final answer:
All the forms of financial responsibility listed for California drivers are acceptable, including a motor vehicle liability insurance policy. The purpose of these requirements is to ensure that drivers can cover the costs of damages from accidents, demonstrating the principle of shared risk in insurance.
Step-by-step explanation:
Among the listed options for maintaining financial responsibility as required by California's Compulsory Financial Responsibility Law, all are valid except for a motor vehicle liability insurance policy, which is indeed a valid form. This is because the law specifically requires either a deposit of $35,000 with the DMV, a surety bond for $50,000 from a licensed company, or a self-insurance certificate issued by the DMV as forms of financial responsibility—all mentioned in the options. Therefore, the exception mentioned in the question is not applicable since a motor vehicle liability insurance policy is a commonly accepted form of financial responsibility in California.
Understanding how auto insurance premiums work can further clarify why insurance is important. If each of the 100 drivers pays a premium of $1,860 annually, the insurance company collects $186,000. This amount covers the costs of accidents that may occur among them. As an example, suppose 60 drivers incur minor damages of $100 each, 30 drivers have medium-sized accidents costing $1,000 each, and 10 drivers experience major accidents costing $15,000 each. The total cost of these accidents is $186,000. By collecting premiums, insurance companies pool the risks and are able to cover these costs, highlighting the principle of shared risk in automobile insurance.