Texas Automobile Insurance

Texas law requires people who drive in Texas to be able to pay for the accidents they cause. Most drivers do this by buying automobile liability insurance. Liability insurance pays to repair or replace the other driver’s car and pays other people’s medical expenses. It does not pay to repair or replace your car or for your injuries.

You must have at least the minimum amount of liability coverage required by the state’s financial responsibility law. The current minimum liability limits are $25,000 for each injured person, up to a total of $50,000 per accident, and $25,000 for property damage per accident. This basic coverage is called “25/50/25” coverage.

Because of car prices and the high cost of medical care, the minimum amounts might not be enough if you cause an accident. If your liability limits are too low to pay for all of the other driver’s costs, the driver may sue you to collect the difference. To protect yourself financially, consider buying more than the basic limits.

Proof of Financial Responsibility
When you buy a Texas Car insurance policy, your insurance company will send you a proof-of-insurance card. You will need to show proof of insurance when you

  * are asked for it by a law enforcement officer
  * have an accident
  * register your car or renew its registration
  * obtain or renew your driver’s license
  * get your car inspected.

There are penalties for violating the state’s financial responsibility laws. A first conviction will result in a fine between $175 and $350. Subsequent convictions could result in fines of $350 to $1,000, suspension of your driver’s license, and impoundment of your automobile.
Know Your Rights

Texas has a Consumer Bill of Rights for auto insurance. Your insurance company must send you a copy with your policy. Read it to understand your rights under Texas law.

Auto Insurance Coverages

Automobile insurance pays for damages, injuries, and other losses specifically covered by your policy. Many insurance companies use the Texas Personal Automobile Policy, a standardized policy form that offers eight types of coverages. Companies may sell alternative policies if the Texas Department of Insurance (TDI) approves them in advance.

Read your policy carefully because coverages can vary by policy and company. Pay special attention to the exclusions section, which lists the things your policy doesn’t cover. The front page of your policy – called the declarations, or “dec,” page – shows the exact name of your insurance company, your policy number, and the amount of each of your coverages and deductibles.

The following summarizes the eight coverages in the Texas Personal Automobile Policy. Although your coverages and policy terms may differ from these, this summary can help you understand various auto insurance coverages and the way they work.

1. Liability Coverage (Basic liability coverage meets the state’s financial responsibility requirement)

Pays: Other people’s expenses for accidents caused by drivers covered by your policy, up to your policy’s dollar limits. These may include the other people’s

  * medical and funeral costs, lost wages, and compensation for pain and suffering
  * car repair or replacement costs
  * auto rental while the other driver’s car is being repaired
  * punitive damages awarded by a court.

Liability insurance also pays your attorney fees if someone sues you because of the accident and bail up to $250 if you are arrested.

Covers: You and your family members, "Family members" include anyone living in your home related to you by blood, marriage, or adoption, including your spouse, children, in-laws, adopted children, wards, and foster children. Other people driving your car with your permission, family members attending school away from home, and spouses living elsewhere during a martial separation also might be covered.

You and your family members might be covered when driving someone else’s automobile – including a rental car – but not a car that you don’t own but have regular access to, such as a company car.

Note: Some policies won’t cover other people, including family members, unless they’re specifically named in the policy. Your policy’s dec page should list the names of all of the people covered by the policy.

2. Medical Payments Coverage

Pays: Medical and funeral bills resulting from accidents, including those in which the other person is a pedestrian or bicyclist.
Covers: You, your family members, and passengers in your car, regardless of who caused the accident.

3. Personal Injury Protection (PIP) CoveragePays: Same as medical payments coverage, plus 80 percent of lost income and the cost of hiring a caregiver for an injured person.

Covers: You, your family members, and passengers in your car, regardless of who caused the accident.
An insurance company must offer you $2,500 in PIP, but you can buy more. If you don’t want PIP, you must reject it in writing.

4. Uninsured/Underinsured Motorist (UM/UIM) Coverage

Pays: Your expenses from an accident caused by an uninsured motorist or a motorist who did not have enough insurance to cover your bills, up to your policy’s dollar limits. Also pays for accidents caused by a hit-and-run driver if you reported the accident promptly to police.

  * Bodily injury UM/UIM pays without deductibles for medical bills, lost wages, pain and suffering, disfigurement, and permanent or partial disability.
  * Property damage UM/UIM pays for auto repairs, a rental car, and damage to items in your car. There is an automatic $250 deductible, which means you must pay the first $250 of the repairs yourself.

Covers: You, your family members, passengers in your car, and others driving your car with your permission.

Insurers must offer UM/UIM coverage. If you don’t want it, you must reject it in writing.

In Texas, a company cannot refuse to renew your policy because of
  * weather-related claims, including damage from hail, floods, tornadoes, high winds, and hurricanes
  * damage from colliding with animals or birds
  * damage from gravel and other flying and falling objects (the company can raise your deductible if you have three such claims in 36 months)
  * towing and labor claims (the company can refuse to renew your towing and labor coverage if you have four such claims in 36 months)
  * other claims or accidents that cannot reasonably be blamed on you, unless you have more than one of these claims in a 12-month period.

Sometimes an insurer will move you to another company in its company group. If a company moves you to another company, it must give you 30 days’ notice that it will not renew your original policy. If the company fails to give you 30 days’ notice, TDI can require the company to renew your policy for another year with your original company.

If you get a nonrenewal or cancellation notice, start shopping for new insurance immediately. Make sure you keep your liability coverage uninterrupted to satisfy Texas’ financial responsibility laws. If you still owe money on your car, your lender will usually require you to maintain collision and comprehensive coverages without interruption. If you cancel or lose these coverages, your lender will buy single-interest automobile physical damage coverage and add the cost to your loan payment. This coverage is expensive and protects only the lender.