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Car Insurance Texas Regulation

Car Insurance in Texas

Texas Car Insurance

Did you know that in Texas you could get a discount on your car insurance just for taking a drug and alcohol awareness course? Learn more about Texas auto insurance laws, rates, and programs.

Car Insurance Requirements

If you choose to buy liability insurance to comply with the law, your policy must have the following minimum limits:

  • $30,000 for each injured person.
  • $60,000 for injuries per incident.
  • $25,000 for property damage.

Other Car Insurance

Texas only requires you to have liability insurance, but there are other optional types of car insurance coverage available to help protect you financially, which include:

  • Collision – This coverage will help cover damages to your vehicle due to accidents with other cars.
  • Comprehensive – This coverage will help with damages to your car due to incidents not involving car collisions. For example, if hail dents your car, you may be covered through comprehensive coverage.
  • Uninsured/Underinsured drivers – The Texas Department of Motor Vehicles (TxDMV) states that about 20% of current drivers in TX are uninsured. This coverage can help protect you from damages caused by these drivers.
  • Towing and labor.

NOTE: If your car is being financed, your lending or leasing company will require you to carry both collision and comprehensive coverage for your car.

Car Insurance Alternatives

Buying liability insurance is the most common way to cover your financial responsibility, but you do have other options:

  • A surety bond from two individual sureties that own property in Texas, with the same coverage limitations as liability insurance.
  • $55,000 cash or securities deposit with the state Comptroller.
  • $55,000 cash or cashier’s check deposit with the county judge of the county in which the car is registered.
  • Certificate of self-insurance – You must own a fleet of more than 25 cars to qualify for a certificate of self-insurance.

Proof of Insurance in Texas

Your car insurance company will give you an insurance card to use as your proof of car insurance. You must show a proof of insurance when you:

  • Are asked for it by a police officer.
  • Get into a car accident.
  • Register or renew your car’s registration.
  • Apply or renew your driver’s license.
  • Have your car inspected.

You should get a new car insurance card from your insurance carrier every time you renew your auto insurance. Most insurance companies offer a minimum term of 6 months on a policy.

TexasSure is a program that helps various Texas government agencies electronically verify that you have car insurance.

Among the agencies that use TexasSure are:

  • The Texas Department of Public Safety.
  • Sherriff and police departments.
  • Vehicle registration offices.

If there are issues with your Texas car insurance information, you may receive one of the following notices:

  • Unmatched notices – According to the Texas Department of Insurance (TDI), less than 1% of insured driver’s cannot be matched with their registered car in the TexasSure system. You will receive this notice if you are on record as having car insurance but the insurance does not match with your car.
  • Uninsured Notices – You will receive this notice if you have a registered vehicle with no record of car insurance for that car.

Violation Fines and Penalties

Violating Texas car insurance laws can bring harsh consequences, including the following fines and penalties:

  • For your first conviction:
    • $175 – $350 in fines.
  • For additional convictions:
    • $350 – $1,000 in fines.
    • Possible suspension of your driver’s license.
    • Possible impoundment of your car.

Texas Automobile Insurance Plan Association

Drivers with poor driving records may have a hard time finding car insurance. If 2 insurance companies have refused to insure you, you can buy your car insurance through the Texas Automobile Insurance Plan Association (TAIPA).

To be eligible for the TAIPA program, you must:

  • Have a valid driver’s license or be applying for one.
  • Live in Texas or have a car registered in Texas.
  • Certify that 2 insurance companies have turned you down within the last 60 days. You do not have to have proof of refusal to insure, but you will need to sign an affidavit stating that 2 insurance companies have rejected your application of insurance.

TAIPA Coverage

Through TAIPA, you will be covered for the minimum required liability coverage PLUS:

  • $2,500 Personal Injury Protection.
  • Uninsured/Underinsured Motorists Coverage of:
    • $30,000 personal injury.
    • $60,000 injuries per incident.
    • $25,000 property damage.

TAIPA only allows you to purchase annual policies, but you do have various options for payment, which include:

  • Paying your full annual premium up-front.
  • 8 Installment payments – You will need to pay a down payment of whichever is greater: 20% of your premium or $40.

Leaving TAIPA

If you have been issued car insurance through TAIPA and have gone 3 years without a car accident or traffic ticket, your insurance carrier must take you out of the TAIPA program and offer you standard car insurance at a lower rate.

Help With Your Car Insurance Complaints

The Texas Department of Insurance (TDI) offers assistance for complaints you might have with insurance companies, including your car insurance carrier.

The most common complaints TDI helps resolve involve:

  • Claim and benefit disputes.
  • False advertising.
  • Misrepresentation.
  • Suspected insurance fraud.

TDI cannot assist you with the following:

  • Determining who was at fault in a car accident.
  • Resolving disputes between you and your insurance carrier when your word is your only evidence.
  • Forcing insurance companies to pay a disputed claim or make a policy exception when no insurance laws were broken.
  • Giving legal advice.

To learn more about how you can get assistance with your car insurance complaints, visit the TDI website.

Driving While Intoxicated (DWI)

The Texas Department of Transportation estimates that someone is hurt or killed in an alcohol-related accident every 20 minutes. Drinking and driving can be costly, not only to your safety but to your wallet. DWI convictions can increase your car insurance rates. The best way to avoid this is not to drink and drive.

To learn more about Texas’ DWI laws visit our DUI & DWI in Texas page.

Drug and Alcohol Driving Awareness Discount

To help promote safe driving, Texas car insurance companies are required to offer you a 5% discount off your car insurance premium for voluntarily taking a Texas Education Agency (TEA)-approved drug and alcohol awareness course.

You are not eligible for this discount if you have been convicted of a drug- or alcohol-related charge in the past 7 years. You are eligible for the discount after 7 years has passed since your conviction.

Staying safe can not only keep your car insurance premiums from rising; it can help you find affordable insurance from the start. Get a quote on car insurance today and see how much you can save.

Most Stolen Cars in Texas

If your car is highly targeted for theft, you may have to pay a little more for car insurance.

The following is a list of the most stolen cars in Texas for 2013, according to www.nicb.org:

  1. Ford Pickup (Full Size).
  2. Chevrolet Pickup (Full Size).
  3. Dodge Pickup (Full Size).
  4. Honda Accord.
  5. Honda Civic.
  6. GMC Pickup (Full Size).
  7. Chevrolet Tahoe.
  8. Toyota Camry.
  9. Chevrolet Impala.
  10. Ford Explorer.

Texas Car Insurance Requirements

An in-depth look at the “financial responsibility” rules for Texas drivers, including the required minimum liability car insurance requirements, plus other Texas auto insurance rules.

Under Texas’s status as a “fault” car accident state, drivers are required to demonstrate their financial responsibility for any crash they might cause. Most Texas drivers do this by buying car insurance, and state law requires certain minimum amounts of coverage. We’ll discuss those minimums in this article, plus a few other important Texas car insurance rules.

Texas is a “Fault” Car Accident State

Texas uses a “fault” system when it comes to liability for a car accident. In the words of the Texas Department of Insurance, a “fault” system is one that requires drivers to “pay for the accidents they cause.”

After an accident occurs, an injured driver, passenger, or pedestrian may decide to file a claim with his or her own auto insurance carrier first, in what’s known as a “first-party” claim. The injured person may also decide to seek compensation from the other driver’s insurer, by filing what’s known as a “third-party” claim. (The “second party” is always the insurance company.) Finally, an injured person may also choose to go to court and file a personal injury lawsuit against the at-fault driver, seeking compensation for medical bills, property damage, pain and suffering, and other losses related to the accident.

(By contrast, “no-fault” states usually require a policyholder’s own insurer to pay for their medical bills, lost income, and other out-of-pocket losses — up to certain minimums — regardless of who caused the accident. In no-fault states, an injured person must meet certain threshold requirements in order to step outside the no-fault car insurance system and make a claim against the at-fault driver.)

Minimum Auto Insurance Requirements for Texas Drivers

As touched on above, Texas requires drivers to demonstrate their financial responsibility in case they cause a car accident on the state’s roads and highways. Most vehicle owners choose to comply with this requirement by purchasing car insurance. If you’re buying car insurance in Texas, the law requires you to have the following minimum amounts of liability car insurance coverage:

  • $30,000 for bodily injury liability per person injured in an accident you cause
  • $60,000 for total bodily injury liability when two or more people are injured in an accident you cause, and
  • $25,000 for property damage per accident you cause.

This basic coverage — known as “30/60/25” coverage for short — pays the medical bills, property damage bills, and other costs of drivers, passengers, and pedestrians who are injured or have their vehicle damaged in a car accident you cause, up to coverage limits. You can (and in some situations should) carry more coverage to protect you in case a serious crash results in significant car accident injuries and vehicle damage. Remember, once policy limits are exhausted, you are personally on the financial hook, so higher insurance limits can help protect your personal assets in the event of a serious crash.

Your liability coverage will kick in if any family member is driving your vehicle, or if you’ve given someone else permission to use it. It will likely also cover you if you get into an accident in a rental car.

You’ll need to carry your insurance card or proof of insurance in your vehicle with you, in case you are asked to present it to a law enforcement officer during a traffic stop. Failing to carry insurance or to provide proof of insurance when asked for it can result in fines and other penalties, especially if you’re involved in an accident.

Finally, remember that the liability coverage we discussed here doesn’t apply to your own injuries or vehicle damage after a car accident. You’ll need different (additional) coverage for that if you’re involved in a car accident and no one else’s coverage applies to your losses. For example, personal injury protection (PIP) or MedPay coverage can be used to pay your car accident medical bills, and collision coverage can pay for repairs to (or replacement of) your damaged vehicle after a car accident.

Uninsured/Underinsured Motorist Coverage in Texas

Texas does not require drivers to buy uninsured/underinsured motorist coverage, but it does require insurance companies to offer this kind of coverage, which can provide additional protection if you’re in an accident with someone who has no car insurance, or whose coverage won’t pay for your medical bills and other losses. In Texas, all uninsured/underinsured motorist coverage is subject to a $250 deductible, which you must pay before the insurance company will pick up the remaining bills up to coverage limits.

More Information on Auto Insurance in Texas

The Texas Department of Insurance website offers more information on auto insurance in Texas, including advice on choosing the right coverage.

Texas Car Insurance

Here you will find out everything you need to know to buy car insurance in Texas. We explain Texas car insurance laws and provide average Texas auto insurance rates for your neighborhood. You’ll also learn how much car insurance you need for your particular situation. That means you’ll know what to expect when shopping for auto insurance in Texas – and you won’t overpay for it.

The average car insurance rate in Texas is $1,300 a year. Your age, your driving record, the model of car you have, the severity and frequency of claims in your neighborhood and other variables are used by insurance companies to figure out the cost of your policy. That’s why the price for the same coverage can vary significantly among insurance companies — and why you should compare rates. For example, in Dallas ZIP code 75242, the highest rate among six carriers is ($2,937) is nearly three times as much as the lowest ($1,072). If you want to compare car insurance quotes, use our tool. Enter a ZIP code to see the average premium for the location. You will also see the highest and lowest rates from the six major carriers surveyed. You can get a more customized rate by choosing from among six age groups and three coverage levels. This way you can tell if your quotes are too high and if you should keep shopping for a lower rate.

Cheap car insurance in Texas

Texas car insurance requirements

Texas car insurance laws mandate that drivers carry minimum liability coverage limits of 30/60/25 on their vehicle. Buying the state required limits to drive is definitely the cheapest way to go. But if you opt for the cheapest car insurance in Texas, you are only covered for damage you do to other drivers’ cars and for others’ injuries. That means your insurer won’t pay for damage to your car or for your injuries if you cause an accident. Still, buying just the minimum coverage required is a good idea if you have an old car or don’t drive much.

It does cost more to buy more protection, but as you’ll see in the chart below, additional coverage is typically affordable. Increasing your insurance from the state minimum to full coverage with a $500 deductible costs, on average, $835 more, or $70 a month. For higher liability limits, the extra cost is just $23 a year.

*The table shows the average annual rate of nearly every ZIP code in Texas from up to six major insurance companies. Rates are for a male driver, age 40, with a clean record and good credit for a 2016 Honda Accord. Data was provided for CarInsurance.com by Quadrant Information Services.

Recommended car insurance coverage

The cheapest car insurance may not provide sufficient protection, so how much insurance should you buy? Bare-bones coverage may be a good choice if you have few assets or have an old car and don’t drive much. But if you have a home and investments, consider buying more insurance. If you don’t, you’re at risk for having your money and house taken to cover the cost of an accident. If you financed your car you will be required to get additional comprehensive and collision coverage.

Use our How Much Car Insurance Do You Need? tool to get a recommendation.

Liability

We recommend you buy more insurance than is required to legally drive a car in your state, especially if you have savings and assets. The more money you have, the more likely you are to be sued following a car accident should your insurance be insufficient to cover all the expenses. If your net worth is:

  • less than $50,000, choose at least 50/100/50
  • between $50,000 and $100,000, choose at least 100/300/100
  • more than $100,000, choose at least 250/500/100

If you’re leasing or financing your car, you must get coverage of 100/300/100 or higher.

Collision and comprehensive

Collision coverage pays for damage to your car after an accident that you cause. Comprehensive insurance pays to replace stolen cars and for damages from vandalism, flooding, hail, fire and animal strikes. If your car is:

  • less than 10 years old, you should strongly consider buying collision and comprehensive.
  • more than 10 years old, only buy collision and comprehensive if your car is worth $3,000 or more, if you couldn’t afford to replace your car if it’s wrecked, or if you just want more protection on your policy.

If you buy comp and collision, check our guide to choosing a deductible amount.

Uninsured/underinsured motorist

These are both optional coverages and should match the liability limits you choose. Uninsured motorist coverage and underinsured motorist coverage pays for damages if you’re hit by a driver with no insurance or a driver with coverage that’s insufficient to pay for your repairs and medical expenses.

Medical coverage (MedPay)

Medical payments coverage can help pay for the medical or funeral expenses of covered drivers and passengers after an accident, regardless of fault, up to $25,000. In most states, including Texas, it’s an optional addition to your car insurance policy. MedPay does the following:

  • Covers you and your passengers’ medical expenses
  • Pays for expenses after health insurance limits are exceeded
  • Offers additional protection to insured drivers who are hit by a car while walking or biking

If you and your passengers:

  • Don’t have health insurance, or have a plan that doesn’t cover car accidents or has low limits, we recommend that you add medical coverage of at least $5,000 to your car insurance policy.
  • Do have health insurance, it’s still a good idea to have medical coverage if you want the best protection in your policy, as it can pay out after your health benefits are maxed out.

Gap insurance

If you don’t own your car outright and have an accident, gap insurance pays the difference between the cash value of your car and the current outstanding balance on your loan or lease.

  • If you’re financing your car, your car is less than one year old and you’ve put less than 20 percent down on it, you should buy gap insurance. If not, you don’t need gap insurance.
  • If you’re leasing your car, it’s a good idea to buy gap insurance if you aren’t already required to in your lease agreement.
  • If you own your car outright, you don’t need gap insurance.

Texas car insurance rates by company

Below you’ll see average annual rates for Texas, ranked cheapest to most expensive, for three coverage levels:

  • State minimum liability requirements
  • Liability limits of $50,000 per person/$100,000 per accident and $50,000 property damage
  • Liability of $100,000 per person/$300,000 per accident and $100,000 property damage, with comprehensive and collision at $500 deductible

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