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