Texas Car Insurance Laws

What’s the minimum auto insurance required in the Lone Star State?

In order to drive a car, truck or motorcycle in Texas, you must carry the required automobile insurance.

Being properly insured isn’t just the law, it’s a wise financial investment.

According to the Insurance Information Institute, Texas is the 13th most expensive state when it comes to auto insurance. However, this is small potatoes when you realize you could lose everything, including your home and savings, if you’re involved in a car accident without adequate insurance.

In this article, we’ll take a closer look at auto insurance in the Lone Star State.

Fault-based insurance system

Texas has a fault-based insurance system. This means that whoever causes the car accident is responsible for paying the damages. (This is different than a no-fault insurance system, in which drivers turn to their own insurance policies to cover damages regardless of who’s at fault for the accident.)

Under the fault-based insurance system, a Texas driver who suffers an injury due to a car accident caused by another person has 3 options:

• File a claim with their own insurance company (in this situation, the insurance company will pursue reimbursement—called “subrogation”—from the at-fault driver’s insurance company)
• File a third-party claim directly with the at-fault driver’s insurance company
• File a personal injury lawsuit in civil court against the at-fault driver (in this situation, the at-fault driver’s insurance company will usually step in and pay or defend the claim)

Minimum auto insurance requirements in Texas

Under Texas law, every driver is required to carry auto liability insurance.

Auto liability insurance covers bodily injuries and property damage caused by the insured driver and sustained by someone other than the insured driver.

The exact amount of auto liability insurance you purchase is up to you. However, the required minimum amounts in Texas are:

• $30,000 for bodily injury or death of 1 person in an accident
• $60,000 for total bodily injury or death in an accident (in other words, for all persons harmed in 1 accident)
• $25,000 for property damage per accident

This coverage is known as 30/60/25 coverage.

Sometimes, the actual cost of an accident may exceed your policy limits. If this is the case, you must either cover the cost with other policies you have (see more on this below) or pay for the remaining damages out of pocket.

Optional insurance coverage policies

While minimum liability coverage is all that’s required to operate a vehicle in Texas, other insurance policies may be important depending on your situation. For example, if you wish to finance the purchase of a new car, your loan provider may require you to purchase collision and comprehensive coverage for your vehicle.

Optional insurance policies include:

• Collision: pays for the cost of repairing or replacing your vehicle after an accident
• Comprehensive: covers the cost of repairing or replacing your vehicle if it’s damaged by fire, hail, vandalism, falling objects, or other non-collision events
• Medical payments: pays for medical bills or funeral expenses due to an accident
• Towing and labor: covers towing and labor charges if your car breaks down
• Uninsured motorist (UM) coverage: pays for your expenses resulting from an accident with an uninsured driver or damages resulting from a hit and run
• Underinsured motorist (UIM) coverage: pays for your expenses resulting from an accident with an underinsured driver
• Personal injury protection (PIP): pays medical expenses in addition to 80% of lost income regardless of who is at fault for an accident
• Rental reimbursement: offers a daily stipend for renting a car if your vehicle is stolen or getting repaired

Who’s covered by your auto insurance?

In Texas, your minimum liability insurance coverage will generally provide protection for:

• You,
• Family members (anyone living in your home who is related either through blood, marriage, or adoption), and
• Anyone driving your car with your permission.

Other policies differ in terms of who’s covered by the policy.

In general, the policy will only cover the people specifically named in the policy (sometimes called the “named insureds” or “additional insureds”). If there’s any question as to who’s covered by your insurance policy, talk to your insurance agent or an insurance attorney.

What happens when you’re in an accident with an uninsured driver?

The risk of being in an accident with a driver who is either uninsured or who doesn’t carry enough insurance to cover the damages caused by the accident is a very real possibility.

Luckily, there are certain insurance policies that apply to these situations, including UM and UIM coverage. However, these policies are optional. If you don’t have one of these policies, you’ll likely have to file a lawsuit against the uninsured driver to recover damages. This is problematic given that drivers who don’t purchase mandatory insurance often don’t have money to satisfy a judgment.

Have an insurance question? A Texas attorney can help. Locate an attorney using our free online directory.