California, (like many other states) has minimum insurance requirements which must be made before you can operate a vehicle legally. Under state law, you are required to have automobile insurance, and if you don’t, there are penalties for not having the minimum amount.
The way that almost all accident-related injuries are compensated is through liability insurance. Since California is an at fault state, the insurance company of the person whose negligence caused the accident is responsible for paying for the injured party’s damages; this is the reason that California requires auto insurance minimums.
Minimum California Car Insurance Coverage