Topic 7 · Insurance and Financial Responsibility
California insurance law is designed to:
- Increase state tax revenue
- Protect both victims and drivers from financial loss — correct answer
- Discourage driving
Why
Compulsory insurance exists so that people harmed in a collision are actually compensated, and so drivers are not personally ruined by one mistake.
Practise this in the real format
Reading one answer is not the same as sitting the test. The simulator runs the first-time adult form: 36 questions, 6 mistakes allowed, 83% to pass.
Source: California Driver's Handbook (DL 600, rev. 6/2025), the document the DMV writes the real test from. Edited by Fernando Aguilera. Aprobify is not affiliated with the California DMV.
More from Insurance and Financial Responsibility
- If the other driver in a crash is uninsured and at fault, what coverage helps you?
- Who takes on financial responsibility for a driver younger than 18?
- If you lend your insured car to a friend, is the car covered?
- Which of the following is a consequence of driving uninsured in California?
- How soon after an accident must an SR-1 report be filed?
- If you cause an accident and your insurance limits are too low to cover all damages, what could happen?