Auto insurance is a tool that protects the insured from financial losses in case of a car accident or theft of the vehicle.
To get this protection, you are required to sign a contract and pay a fee (premium) to the insurance provider. In turn, the insurance provider agrees to pay for any loss incurred. Per the Texas Motor Vehicle Safety Responsibility Act, Texans must have the state minimum requirement of auto liability insurance coverage, to legally drive. The Texas Department of Insurance (TDI) is the regulatory body for auto insurance in Texas.
One of the most important reasons you need auto insurance in Texas is because it is a legal requirement per the Texas Motor Vehicle Safety Responsibility Act. Texans are required to carry at least the liability coverage.
All drivers must always carry proof of the coverage, known as the Texas Liability Insurance Card, which must be presented upon request to any law enforcement officer. The proof of insurance card shows the:
Per rule §5.204 of the Texas Administrative Code, if you operate your vehicle without a valid insurance policy, you commit a misdemeanor punishable by a fine between $175 to $350 for the first offense. Subsequent offenses are punishable by a fine of $350 and $1,000, and your license is liable for suspension unless you can prove financial responsibility for two years. It is important to note that certain vehicles are exempted from having minimum liability coverage if they are:
Also, with the right type of auto insurance, you will be afforded protection even when you are not at fault in the accident. That way, you will not pay out of pocket for any liability incurred especially, if the at-fault driver is not insured or underinsured. This means as the victim in an accident, any injury or property damage you may have incurred will be covered by your auto insurance provider.
Texas is a large state, and it comes with a vast range of roads and different highways that Texans and the guests of the state commute on every day to get to their destinations. It is estimated that in 2022, there were over 23 million private and commercial vehicles (est. 23,385,535) registered in Texas.
In 2020, Texas Department of Transportation (TxDoT) reported over 474,549 crashes throughout the state, with a resultant 3,896 fatalities. Alcohol was determined as the main factor for the fatal crashes in Texas in every 4th driving fatality.
With 1 out of 5 vehicles in Texas uninsured or underinsured, almost 5 million vehicles (est. 4,671,707) present danger to the drivers on the road. Uninsured and underinsured coverage costs Texan nearly $900 million annually.
You may need auto insurance to supplement your health insurance policy by helping you pay for the medical expenses that your health insurance coverage may not cover, like dental work and medical treatment needed due to a car accident.
Auto insurance in Texas works as a safeguard for your vehicle and finances in case of accidents, thefts, or any other unforeseen incident. Auto insurance works to pay off the liability incurred from the damage to the vehicle, medical expenses, and injuries or damages to another driver.
Texas is an at-fault state , which means anyone who causes a car accident will be responsible financially. It means an auto insurance provider will be liable to pay out the insurance claim for their policyholder's damages or medical expenses.
Usually, when a car accident ends up causing bodily injury or property damage, the law enforcement arrives at the scene to write up a report. This police report is what insurance company adjusters use to determine who is at fault. It may take some time to determine who was at fault, especially in multi-vehicle collisions.
While determining who is at fault, your insurance provider can pay your claims to take care of the injury sustained or property damage. If you are deemed not at fault, the other vehicle's insurance provider will pay for the damages and medical expenses. Your insurance provider can then recover the cost of the claim paid for the bodily injury and property damage and deductible from the at-fault insurance provider through an insurance instrument known as subrogation.
If the driver who is at fault does not have auto insurance, you can file a claim through uninsured motorist coverage if you have it under your policy.
If you are not at-fault in an accident, your auto insurance premium should not go up as a result.
As of 2022, Texas had a population of nearly 30 million residents (est. 29,730,030), and 200 registered domestic property and casualty (P&C) companies. While Texas leads the nation in the amount of insurers, the Texas insurance market is the second largest in the nation (by the amount of taxes paid), trailing only behind California.
In 2020, an estimated 47 million P&C policies were written in Texas, and the state recorded over $51 billion in premiums paid in. Private auto insurance represented 56% of all policies written, making it the property and casualty market leader.
In 2019, 184 private auto insurance companies recorded $23 Billion in direct premiums in Texas. Out of these, auto liability was written at over $12 Billion (est. $12,446,652,000) (20% of all Texas P&C insurance), and collision & comprehensive was written at $10 Billion (est. $10,119,781,000) (16% of all Texas P&C insurance).
Private auto insurance combined, makes up nearly 36% of all Property & Casualty insurance business in Texas, ranking it 2nd by the amount of written premium.
Commercial auto liability coverage was the third most direct premium written in Texas with over $4.8 Billion (7.62% of annual Texas Property & Casualty).
Auto liability written totaled nearly $4B (est. $3,801,203,000) representing 6% of all Property & Casualty in Texas. Collision and comprehensive premiums were over $1B (est. $1,068,242,000) representing almost 2% of the total P&C market.
How much you pay monthly for an auto insurance policy depends on your driving record, the type of a vehicle, it's age, its appraised value, and the coverage level under your policy.
Average auto insurance in Texas is estimated to cost around $2,000 (per year) for full coverage, about $166 monthly. The average cost of liability coverage is $80 per month. However, if you add comprehensive and collision coverage, your rate may be closer to $150.
An individual's credit score sometimes influences the rate of premium you pay for your auto insurance. A great credit score sometimes gets an individual better rates, while individuals with a bad credit score may be required to pay more for the coverage. For instance, with a bad or non-existent credit history, you may be paying $250 per month for auto insurance coverage; meanwhile, with a great credit score, you can cut the bill nearly in half.
Age also plays a significant role in determining the premium rate of insurance policies. This is because the probability of a young driver getting into a car accident is much higher than an adult or much older person will. Therefore, young drivers are considered higher risk and more expensive to insure by insurance providers.
Individuals between 16 and 17 may have to pay upwards of $400-500 monthly for an auto insurance policy. In contrast, adults pay about $150-160 if they are in their 20s and $100-125 in their 50s. To stay proactive, you can check your driving record maintained by the Texas Department of Motor Vehicles (DMV) to see how many driving infractions and points you have on your records. If you have points on your driving record, you can take steps like fighting the ticket, attending the state-designated traffic school, or paying all applicable fines promptly.
For a better insight into the cost of auto insurance premiums, consult with a state-licensed insurance agent knowledgeable enough to understand your needs and who can match you with the most cost-effective option that fits your particular set of needs.
Auto insurance in Texas is divided into two parts:
Private auto insurance covers the insurance needs of individuals and businesses using privately owned cars. Private auto insurance protects an individual named a driver on another person's private auto insurance policy. Private auto insurance covers the driver of a vehicle when it is used for social, domestic, and other personal purposes. Most private insurance companies will cover you when you commute to and from work.
In Texas, some of the common types of private auto insurance include:
Note that you cannot use private auto insurance to carry out any business activity that involves commercial transactions. If you have a business and you have a vehicle to be used for the day-to-day running of the business, you must insure your vehicle with a commercial auto insurance policy.
Commercial auto insurance is a type of auto insurance policy that protects a vehicle used for the day-to-day running of a business, like vehicles used for transportation of goods or passengers. Commercial vehicle insurance covers liabilities that personal auto insurance will typically not cover under its policy. It covers company vehicles, starting from the cars leased by the business owners, to the fleets of commercial trucks. Like private auto insurance, it shares similar vehicle insurance policy coverages like liability, collision, comprehensive, medical payments, and uninsured motorist coverage.
Commercial and private auto insurance have similar coverages and what they are meant to cover. The difference is between where you get it. Most private auto insurers do not provide commercial coverage. Commercial auto insurance is purchased through the Texas-licensed insurance agents and brokers who specialize in Commercial Coverage.
So, what are the coverages in auto insurance in Texas:
Property damage liability covers the cost of replacement or repairs for damages caused to someone else's car or property in an at-fault accident. So when your neighbor's mailbox is damaged after crashing into it, the property damage liability will cover it. This will also apply to your vehicle if you have certain auto insurance coverage on your car.
Property damage liability covers the cost of replacement or repairs for damages caused to:
The following Texas auto insurance policies will provide coverage for property damage:
Texas drivers are required to maintain property damage (PD) liability coverage at a minimum of $25,000 per accident.
So, if you cause a motor vehicle accident, your auto liability property damage coverage will cover you by paying for the repairs of the "other" car you damaged and any other property that needs repairs.
Typical Texas property damage liability coverage is for $100,000 per accident. Make sure to discuss your coverage needs with a Texas-licensed P&C insurance agent, who can provide professional advice based on your specific needs and the best options to fill them.
Although it is optional coverage on your auto insurance policy, it may not be optional for you if you lease or finance your vehicle. The insurer prescribes the limit based on the vehicle's actual cash value (ACV). For example, when a car is damaged by fire, the insurance provider will replace it at the vehicle's depreciated value at the time of the incident,minus the deductible.
Collision coverage - Collision auto insurance in Texas helps pay for the repairs or replacement of your own vehicle after a motor vehicle accident or collision with an object. Collision coverage is useful even when the driver is not at fault. Collision auto insurance is not compulsory in Texas; nonetheless, individuals purchase it to give themselves full coverage. However, if a vehicle is leased or financed by a lender, a driver may be required to buy collision auto insurance. Collision auto insurance does not have a coverage limit, and what the insurance provider pays is the actual cash value of your motor vehicle.
Uninsured coverage (UI) in Texas protects an individual from property damage when they get into an accident with someone without the state minimum liability coverage requirements or a hit and run driver. Property damage coverage in uninsured insurance provides repairs and replacements for damages caused to your vehicle by an uninsured at-fault driver. UI coverage also protects family members, passengers, and anyone entitled to coverage under the policy.
In theory, the state requires every driver to have liability coverage; however, not all drivers in Texas purchase it. So when you get into an accident that is not your fault and the guilty party is uninsured, the uninsured insurance coverage will kick in to repair your property damage. Even though uninsured insurance coverage is optional, Texas insurance providers must ensure they offer it to you. You have the right to decline purchase.
Underinsured coverage is very important in Texas, because of the large amount of out-of-state traffic flowing through it. You don't know their coverage. For example, the property damage liability for the vehicles registered in California is $5,000, while the vehicles from Michigan have a $1 Million property coverage by law.
Like uninsured coverage, insurance providers must offer an insured the option of purchasing the underinsured insurance coverage. The insured has the option of declining purchase.
Typical Uninsured/Underinsured Motorist Bodily Injury coverage in Texas is: $300,000 per person/$500,000 per accident.
Liability, collision, and comprehensive coverage cannot provide enough coverage in such a situation where your car value has depreciated below the debt owed. This is why Gap insurance is used together with collision and comprehensive coverage.
Insurance providers consider business drivers more significant risks because they are often on the road. The probability of being involved in a vehicle accident is higher than those who commute to and from work once a day. This is why non-owner auto insurance does not cover business use; what is required is a commercial auto policy. However, if you occasionally use your vehicle for work, your auto insurance may cover the liability incurred if you get into an accident.
For example, if the covered vehicle with an ACV of $30,000 is totaled, the policy with a CRA of 20% will pay 120% of the ACV (minus the deductible). $30,000x120%= $36,000. The highest auto deductible in Texas is $1,000. $36,000-$1,000=$35,000. The insured with a total vehicle and ACV of 20% receives $35,000 in case of a total loss.
When an individual buys a new car, they may want to consider getting this coverage so that if the car gets totaled in a crash or stolen, they can more easily afford to transition to a higher priced vehicle.
New car replacement coverage is an optional add-on in Texas, and you can buy it in addition to the auto insurance full coverage. Talk to your insurer or to a knowledgeable state-licensed insurance agent, to find out more.
It is important to note that if the cost for repairs or replacement bills exceeds your liability coverage limits, you will bear the excess cost by paying out of your own pockets. Make sure to discuss your auto insurance needs only with state-licensed insurance professionals who are able to make recommendations based on your particular set of needs.
In Texas, in an at-fault accident that injures another driver or passenger, bodily injury liability coverage in your auto insurance policy covers the associated medical cost. Note that injuries sustained by the offending driver are not covered by bodily injury liability coverage. At-fault driver's bodily injury are covered by medical payment coverage, a type of auto insurance not under auto liability insurance.
Texas bodily injury liability coverage usually covers the following:
The following auto insurance policies will provide coverage for bodily injury in Texas:
Texas drivers are required to maintain bodily injury (BI) liability coverage at a minimum of:
If you are a vehicle owner living in Texas, you must carry bodily injury coverage. Texas is an at-fault state, which requires the driver at fault to bear all the financial consequences that may arise following a vehicle accident. Otherwise, their driver's license may be suspended or revoked by the Texas Department of Motor Vehicles if they fail to provide proof of insurance.
Auto insurance providers are responsible for the first payments for the bodily injury when an accident occurs. This is the main reason why all Texans are required to have auto liability coverage. The coverage amount for medical expenses is paid up to the at-fault driver's policy limits. After that your health insurance can come into play if required.
If a health insurance provider pays the medical expenses first, the health insurance provider recovers the paid claims from the auto insurance provider of the at-fault driver.
Typical Texas PIP coverage is for $25,000 per person. Discuss your specific needs with an insurance professional, to get a customized solution and advice.
Uninsured motorist coverage may be the best way to protect yourself in case of bodily injury. UI/BI provides medical expenses coverage for everyone in your vehicle when the at-fault driver does not have the minimum auto insurance liability. It also includes lost wages and pain and suffering the insured driver and passengers in the vehicle experience during recovery. Most insurance providers in Texas will offer you uninsured motorist coverage; you are at liberty to decline it.
Underinsured motorist coverage in Texas covers whatever is left of an at-fault driver's bodily injury liability limit by providing coverage for medical expenses, vehicle repairs, replacement, lost wages, pain, and suffering when the at-fault driver's liability has been exhausted. That is, you will be protected when someone who does not have enough auto insurance coverage hits you. Most insurance providers usually offer motor vehicle owners underinsured motorist coverage; if you do not want it, you can voluntarily decline it.
Liability coverage in Texas covers the payments for property damage and injuries sustained by another person due to an accident in which you are at fault. Auto liability coverage is also known as the State Minimum Coverage in Texas. Vehicle owners in the state must carry their driver's license and Texas Liability Insurance Card as proof of financial responsibility (minimum liability coverage). Auto liability coverage does not protect the driver/vehicle at fault in Texas. However, the passengers in the driver's car at fault will be covered.
In Texas, the minimum liability coverage a driver must have include:
It is recommended to get auto liability insurance above the Texas minimum liability coverage. This way, any cost above the minimum limit will not be paid out of pocket by the driver at fault. Typically, drivers will need to pay for additional costs above their insurable coverage limit.
The most common Texas liability coverage is for:
Note that auto liability is not only crucial for privately owned motor vehicles; it is equally important for commercial vehicles. Suppose you run a business that uses motor vehicles to run errands, carry equipment, and transport your clients. In that case, you must get commercial general liability coverage as an optional add-on for your commercial auto insurance. The commercial auto insurance coverage covers liability incurred and damage to the vehicle, such as your cars, trucks, and vans registered for your business's day-to-day running. It also covers claims of bodily injury arising out of the business's day-to-day running.
Even though private auto insurance and commercial auto insurance have similar coverage, there are also key differences between a commercial auto insurance policy and your personal auto policy that may include eligibility, definitions, coverages, exclusions, and limits.
The following are some differences between private auto insurance and commercial auto insurance in Texas:
At the end, whichever auto insurance type you purchase depends on your insurance needs. If you will be using your vehicle for commercial purposes like a cab or running errands for your business, then a commercial auto insurance policy suits you best. If you are using your vehicle for personal purposes such as visiting friends and family or transporting yourself to work, you need private auto insurance. In the end, it depends entirely on the requirement and needs of your car.
Make sure to discuss your needs with a state-licensed auto insurance agent who can advise you on the needed coverage. For example, if you lease a car for a business, it must be insured by a commercial insurance, which is usually sold by the agents specializing in commercial coverage.
Auto insurance in Texas usually follows the vehicle, not the driver. Your auto insurance liability coverage, collision, and comprehensive coverage follow the car. The driver must have purchased the optional auto insurance coverage, that is, the medical payment, PIP to be covered personally.
When someone borrows your car and is at fault for a motor vehicle accident, your auto insurance liability coverage will cover them. However, if the damage exceeds your coverage limits, the borrower's liability coverage may kick in as the secondary coverage after your liability coverage is exceeded. It is important to note that when you loan your friend your car, and they cause an accident, you will need to pay deductibles, and your premium rate may go up after the claim. Also, your medical payment and PIP coverages do not cover your friend who borrowed your car and caused an accident. Medical payment and PIP coverages protect only you.
However, there are instances where the car insurance follows the driver. According to the Texas Department of Insurance, when you or your family member drives a rental car, you will get liability coverage if your policy extends coverage to it. Your policy collision and comprehensive coverage will provide coverage for any damage caused to the rental car.
When you lend a friend your car, it may seem like a good idea; in the end, you may end up filing an auto insurance claim under your policy. When you borrow out your car, you also borrow out your insurance coverage. Consult with a state-issued licensed agent to learn about the risk of renting a car or driving a vehicle you do not own.
When you get into an at-fault accident, you incur liabilities of the other vehicle's occupants, including bodily injuries or property damage. However, if the accident was caused by another driver and your vehicle is damaged, or you sustain an injury, the auto liability insurance plan of the at-fault driver kicks in to cover the incurred costs.
Once an incident has been duly recorded, the at-fault party files a claim with their insurance provider. After filing the auto insurance claim, the insurance provider helps pay for the cost of taking care of the bodily injury and property damage.
It is important to note that there are instances where the driver is not carrying enough liability coverage to protect you. This is when your uninsured/underinsured insurance coverage kicks in to cover any medical bills you may have incurred.
To know how much auto insurance coverage you need, you must consider where you live. Texas requires you to have auto liability coverage evidencing the minimum requirement of 30/60/25 on your vehicle before you can drive it. It is recommended to get auto liability insurance above the Texas minimum liability coverage. This way, any cost above the minimum limit will not be paid out of pocket by the driver at fault. Typically, drivers will need to pay for additional costs above their insurable coverage limit.
You need to consider the value of your vehicle and whether you own the car outrightly or it is still being financed through a car loan. All this will help you determine how much auto insurance coverage you need. In addition to the auto liability coverage, you may need to purchase comprehensive, collision, medical payments, personal injury protection, uninsured and underinsured motorist coverage. Since there is no Texas minimum requirement for these types of auto insurance coverages, the choice is yours to decide the amount of coverage you can afford and need - to fit your requirements.
Like in almost all insurance coverage, you choose your deductible, which usually ranges between $100 and $1,000. The higher your deductible, the lower your premium, and vice versa. Therefore, it would be best to consider how much premium and deductible you can handle when deciding on your comprehensive auto coverage.
If your car is being financed through a loan or a lease, you may need to add gap insurance in addition to the auto insurance coverages mentioned above. Gap insurance is an inexpensive optional add-on to your auto insurance coverage, and it typically costs about $500-$1,000 as a one-time payment, or around $30-$100 per year. The amount of coverage an individual needs depends on the gap size, between the balance of the loan and the actual cash value of the vehicle. The larger the gap, the higher the cost of coverage. Once the loan is paid off, Gap insurance should be canceled.
If your car is damaged and needs to go in for repairs, you may need to have a backup plan to help you move around. Most times, you may need to rent a vehicle to help go places, and this is why you may need rental reimbursement coverage. When determining how much rental reimbursement coverage one requires in Texas, there is a need to decide if they can afford to cover the cost of a car rental while their car is being repaired after a covered loss. Usually, rental reimbursement coverage has daily limits and a maximum number of days it can be used. Typically, most coverages provide up to $25 per day for a maximum of 30 days until the car being repaired is deemed usable. If the rented vehicle costs more or you need to use it for a more extended period, you will be responsible for the out-of-pocket cost. It is important to note that rental reimbursement coverage does not require a deductible.
Even though you do not have a vehicle, you may need non-owner insurance coverage if you frequently drive another person's car. The amount of non-owner auto insurance coverage Texans need depends on their finances. However, Texans typically pay between $200 and $500 annually for non-owner auto insurance. When determining an insurance premium, the insurance provider looks at the driving history and driving frequency. Typically, individuals do not need to pay for deductibles when purchasing non-owner auto insurance.
In the end, whether you are thinking of how much auto insurance coverage you need for your private auto or commercial auto, the coverage should be enough to protect you from financial ruin if you were in an accident, regardless of who was at fault.
Uninsured/Underinsured Motorist Property Damage: $100,000 per accident, with $250 deductible
Car Replacement Coverage: 10%-20%
Comprehensive coverage: $250 - $1,000, per occurrence
Collision coverage: $250 - $1,000, per occurrence
Bodily Injury (BI): $300,000, per person / $500,000 BI or death, per accident
Property Damage (PD): $100,000 per accident
Uninsured/Underinsured Motorist Bodily Injury: $300,000 per person / $500,000 per accident
Personal Injury Protection: $25,000 per person
Consult with a state-licensed insurance agent to learn more about your options compared to your insurance needs. Also, you can speak to a commercial insurance agent licensed in Texas for more information regarding company-owned auto insurance coverage.
Yes. Auto insurance covers rental cars or other transportation such as public buses or cab rides after a covered loss in Texas. For instance, when a damaged vehicle after a covered loss is under repairs, the rental reimbursement coverage serves the owner by paying for transportation expenses. Rental reimbursement coverage in Texas is an optional auto insurance coverage that helps drivers pay for transportation expenses such as a rental car or public transportation cab fare. It only covers the cost of rented vehicles, bus fares, or cab rides while a car is being repaired due to a covered loss. These covered losses are usually under the collision or comprehensive coverage.
You can use your existing auto liability insurance coverage when renting a car. If your existing liability limits do not meet the minimum state requirements, where you plan to rent the car, you may usually purchase additional coverage from the rental place.
Consult with a state-licensed insurance agent for free to know more about rental cars coverage.
Yes, car insurance covers your vehicle's repair after a covered accident. If you are at fault in an accident that caused property damage to another person's car, auto liability insurance will cover the expenses of the repairs. Since auto liability insurance does not provide coverage to your vehicle, the optional auto insurance add-on, the comprehensive, and collision coverages will pay for the repairs of the car depending on the covered accident. When you are not the vehicle owner and you cause an accident, your non-owner insurance coverage will cover the liability of repairing the other person's car. Auto insurance also provides coverage for the repairs of parked vehicles as long as you have active parked insurance coverage.
Consult with a state-licensed insurance agent to learn more about the auto insurance coverages that will pay for your vehicle's repairs, whether you are at fault or not.
Yes, if your windshield is damaged due to a collision accident or something other than a collision like hail storms or animal collision, you can have it replaced under a collision or comprehensive insurance coverage. Also, if an at-fault accident causes damage to another person's windshield, your auto liability insurance coverage will pay for replacing the windshield. Non-owner insurance coverage also helps replace a damaged windshield if you cause an accident to another person's car when driving a vehicle that does not belong to you.
It depends on the cause of the engine failure. Typically, car insurance does not cover the repairs of engine failure caused by mechanical fault or wear and tear of the engine. However if the engine failure is caused by a collision, fire, flood, or other covered event under an auto insurance coverage, then coverages like auto liability, comprehensive insurance, collision, and non owner insurance will cover it. However, to claim this, the insured must be able to provide proof that the engine failure was caused by a covered event and not just wear and tear of the engine.
No, auto insurance will not cover your personal belongings left in the stolen car. These personal items are usually covered by a homeowners or renters insurance policy, at the location where the vehicle is stored.
Short-term car insurance typically runs between two and 28 days. While many individuals consider short-term car insurance coverage beneficial, it is not widely available. For instance, you will not likely get any car insurance with a policy term of fewer than six months from a licensed auto insurance company in Texas. However, if you still need to get auto coverage for only a few days or weeks, you can still get it. This article will address how to get temporary car insurance in Texas despite its limited availability or unavailability state-wide.
Discuss your auto insurance needs with state-licensed, knowledgeable, and experienced insurance professionals, who are legally permitted to analyze your insurance needs and offer solutions for them.