Texas Car Insurance 101

Texas car insurance is known as auto insurance. It covers liabilities arising from loss or damage to vehicles, like cars, two-wheelers, buses, vans, trucks, motorcycles, and passenger and commercial vehicles. The Texas Department of Insurance is in charge of auto insurance in the state. Auto insurance is designed to mitigate physical damage or direct loss and indemnify the owner wholly or partly by repair, payment, or replacement. Eight basic auto insurance coverages are available in Texas, some of which include liability coverage, personal injury protection (PIP) coverage, comprehensive (other than collision) coverage, medical payments coverage, and collision coverage. These coverages vary by policy.

What Type of Insurance is Auto Insurance?

Auto insurance falls under the Property and Liability type of insurance. It is one of the insurance policies under the Texas Department of Insurance. Auto insurance is an insurance policy between an insurer and the policyholder (person or group that the insurance policy covers), which mitigates any financial loss in the event of an accident or theft. The Texas Motor Vehicle Safety Responsibility Act law requires that drivers take responsibility for any accident or damages they cause. This may be done through auto insurance; thus, auto insurance is mandatory in Texas. Depending on the auto insurance coverage policy, it may cover the repair or replacement of the other vehicle and any medical expenses that may result from the accident.

Auto insurance may either be personal auto insurance or commercial auto insurance. The distinct difference between both is who owns the vehicle. If a business owns a vehicle, it must be covered by commercial auto insurance because personal auto insurance only covers the actual owner of the vehicle. On the other hand, personal auto insurance may not cover other persons driving a car if these persons are not registered under the car owner's insurance policy. Therefore if a vehicle is leased or used to travel to job sites, deliver goods, transport work-related work equipment, or other work-related purposes, personal auto insurance will not cover it.

Discuss your auto insurance needs with a knowledgeable state-licensed property insurance professional, who can assess your needs and make personalized suggestions.

LIABILITY INSURANCE

The purpose of liability insurance is to protect the policyholder from accidents caused by them that may result in the injury of a third party or a third party's car or other property damage. However, liability insurance does not cover the policyholder and their vehicle. The Texas Motor Vehicle Safety Responsibility Act Section 601.072 mandates that drivers obtain auto insurance policies that include minimum liability coverage. There are two parts of liability coverage, including bodily injury liability and property damage liability. For example, suppose there is an accident. In that case, the bodily injury liability may cover the third party's medical bills and some other expenses. In contrast, the property damage liability may cover the damages involved in the accident.

COLLISION INSURANCE

Collision insurance provides a policyholder cover for damages to their vehicles if the damages result from a single-car rollover, collision with another vehicle, or other objects like trees, street lights, or guardrails. However, collision insurance will only cover damages whether the policyholder is at fault or not. Collision coverage does not reimburse the policyholder for damages resulting from mechanical failure or normal wear and tear on their vehicle. It only covers damage from potholes or rollover accidents. It is an optional coverage designed to protect your vehicle when damage occurs due to a collision with another object. While collision insurance provides coverage for personal vehicles involved in a collision, it may not cover damages caused by a collision that occurs during commercial use, such as a hired car or company vehicle. Only a commercial insurance policy will cover such damages.

COMPREHENSIVE AUTO

Comprehensive auto insurance in Texas provides complete coverage for a policyholder, although it does not cover damages caused by any form of collision. For instance, if a policyholder's car is stolen or damaged by natural disasters (such as floods, earthquakes, hurricanes, tornadoes, etc.), riots, fire, vandalism, or anything that does not involve a collision, comprehensive auto insurance will cover the damages incurred. Comprehensive auto insurance also covers the damages incurred by a vehicle crushed by a collapsing garage, contact with animals, spray-painted by a vandal, or any other related event. However, comprehensive auto insurance will not cover collision with another vehicle, potholes, or any object. Comprehensive insurance will also not bear the cost of anything personal stolen from your car. Therefore drivers may be required to get comprehensive auto insurance along with collision insurance, especially if they have not completely paid for the vehicles they use.

In addition, comprehensive auto does not cover vehicles used for commercial purposes; such vehicles will need to be insured on the commercial auto policy, although this is more expensive. Commercial auto insurance provides more coverage for employees, family members, and other drivers. It covers automobiles used for commercial purposes, including company cars, commercial trucks, and other commercial vehicles that personal auto insurance does not cover.

UNINSURED / UNDERINSURED

The purpose of the uninsured/underinsured coverage is to bear the cost of damages resulting from a policyholder being hit by someone who only has the state's minimum limits, if it is not enough to cover the damages they caused. For example, the uninsured/underinsured insurance covers a road accident caused by another driver involving a policyholder where the other driver does not have car insurance or enough money to pay the policyholder's medical and car repair bills. Uninsured/underinsured motorist coverage also covers property damages caused by hit-and-run accidents. A policyholder may need to report the accident to the police in a hit-and-run accident. However, the insurance policy only covers physical contact between the policyholder's vehicle and another vehicle in a hit-and-run accident. This means that if a policyholder veers off course to avoid the other car but runs into a streetlight and does not hit any other vehicle, but the person at fault drives away, damages resulting from this will not be covered.

NON-OWNER CAR INSURANCE

Non-owner car insurance provides coverage for individuals who drive regularly but do not own any cars. It is a type of liability car insurance that covers other drivers' medical expenses and vehicle repair costs when a policyholder causes an accident while driving someone else's car. With non-owner car insurance, individuals can protect themselves against losses that may result from accidents they cause with vehicles not owned by them. However, non-owner car insurance does not provide coverage if the accident is not the policyholder's fault. Note that non-owner car insurance may not apply if a policyholder is driving a vehicle used for commercial purposes or a rental car. While Texas law does not mandate that an individual possesses non-owner auto insurance to drive someone else's vehicle if the owner is insured, an individual who regularly borrows different cars will need to get non-owner auto insurance. Texas requires that a person looking to obtain non-owner car insurance:

• Possesses a valid driver's license or can obtain one within 30 days by getting car insurance

• Does not own a vehicle

• Does not have frequent access to a vehicle owned by a household member. If a person frequently borrows a vehicle from their household member, they must add the person borrowing the car to the list of drivers on their auto insurance policy.

PARKED CAR INSURANCE

Parked car insurance is meant for a car that is temporarily parked off the street or in a locked garage and will not be in use for an extended period of time. It is a better option than canceling one's insurance coverage altogether. Generally, parked car insurance does not include liability and collision coverage policies; instead, it provides coverage if a car is stolen, damaged by vandalism, bad weather, hail, or lightning, or any animal-inflicted damage while the car is parked.

GAP INSURANCE

Gap insurance refers to guaranteed auto protection insurance and covers the difference between what a policyholder owes on their car and what it is worth. For example, if a policy holder's car is stolen or totaled, gap insurance will bear the cost of what the car is currently worth and not the initial cost of the car or how much the policyholder still owes. It is not required by law in Texas, but a person may get it if their car is worth less than what they owe on their car loan, so they do not have to make payments for a vehicle no longer in their possession. An individual can get gap insurance coverage if they have a new car, but getting gap insurance coverage for a used vehicle or a vehicle that is several years old may not be worth it. Some factors that may reduce the amount a policyholder gets when they have a gap insurance claim are:

• Outstanding payments, including finance charges, warranty charges, or car finance balloon payments

• A deductible the policyholder may have to pay before the insurance

• Damages resulting from an accident that happened in the past

Contact a knowledgeable state-licensed auto insurance professional, who can assess your car insurance needs and make personalized suggestions.

What is a Car Insurance Premium?

A car insurance premium is defined as the amount a policyholder pays their insurance company over a fixed period in exchange for insurance coverage. A car insurance premium may be payable monthly, quarterly, or every six months. After paying a car insurance premium, the insurance company will provide coverage for the policyholder's car. Depending on the coverage, the insurance company will partially or entirely bear the costs of property damages or bodily injuries caused by accidents or perils involving the insured car. Typically, a car insurance premium may be determined by the policyholder's:

• Type of car

• Age

• The location where the car is kept

• Coverage options selected

• Deductible amount chosen

• Driving record and claims history

• Credit history

• Anti-theft features of the car

• Number of people on the policy

In Texas, you may be able to get a discount to reduce your premium. Although the basis for a discount, what discount to offer, and the amount of the discount is mainly determined by the insurance company, you might be qualified for a discount if you have:

• Completed a defensive driving or a driver education course

• Airbags, anti-lock brakes, and anti-theft features in your car

• Other insurance policies with the same insurance company

• More than one car on a policy

• A good driving record and no claims

What is an Average Monthly Premium for Car Insurance in Texas?

In Texas, the 30/60/25 coverage rule applies as required by the Texas Motor Vehicle Safety Responsibility Act. Based on this rule, drivers in the state must have a minimum of $30,000 of coverage for injuries per person, a minimum of $60,000 per accident, and $25,000 of coverage for property damage. Therefore, the average monthly cost of car insurance in Texas is $56 per for a minimum liability policy. On the other hand, the average cost of full coverage, including comprehensive and collision, is $156 per month. The costs are mainly determined by the city, and the driver's driving records, type of car, credit history, etc.

Contact a state-licensed car insurance professional with access to multiple insurers. An insurance agent can assess your auto insurance needs, make personalized suggestions and present you with the options available to you locally.

What is a Car Insurance Deductible?

A car insurance deductible is the direct payment of money a policyholder pays on a claim before their auto insurance policy covers the rest. Car insurance policies, including collision, comprehensive, uninsured motorist, and gap insurance, have varying car insurance deductibles. A policyholder can choose what car insurance deductibles they are interested in, either high or low deductibles. The higher the deductible, the lower the cost for the policy. However, if the policyholder selects the lower deductible, they will have to pay more money for an insurance claim. Talk to a state-licensed agent to better weigh your options of what deductible to settle for.

• Liability Insurance - no deductibles are specified for liability car insurance policies in Texas

• Collision Insurance - the standard Texas deductible for collision car insurance is $500 to $1000

• Comprehensive Insurance - the standard Texas deductible for comprehensive car insurance is $500 to $2000

• Non-Owner Car Insurance - non-owner car insurance policies in Texas do not have deductibles.

• Parked Car Insurance - no deductibles are specified for parked car insurance policies in Texas

• Gap Car Insurance - the standard Texas deductible for gap car insurance is $500 to $1000

How Does Car Insurance Work if I am not at Fault?

Texas is a fault car accident state. In a case where an accident caused by another driver occurs, the law requires that the other driver's insurance policy pays for the damages and injuries incurred during the accident. However, there are cases where the other driver's insurance company refuses to pay for damages because it does not agree that the other driver is at fault. In such cases, you can file a claim with your own company if you have collision coverage and not just liability coverage. Chances are, your company will attempt to get the other company to pay your claim. If this is successful and the other company agrees to pay, you may be reimbursed with your deductible amount.

An alternative is to get the names, addresses, and telephone numbers of any witnesses to the accident where the other driver was at fault. Then, collate this information and submit it to your insurance company. These witnesses could help prove fault if you were in an accident caused by another driver. However, if you cannot provide witnesses to prove that the other driver is at fault and the other driver denies fault, their insurance company might deny your claim.

WHAT is Covered by Auto Insurance?

Auto insurance policies vary mainly depending on the coverage of each policy. Below is a list of some auto insurance policies and what they cover.

• Liability insurance covers bodily injury liability by reimbursing a policyholder for costs associated with injuries or death that the policyholder or another driver caused while driving the policyholder's car. Liability insurance also covers property damage liability, which reimburses others for the damage your car causes to another vehicle or property, such as a building, fence, or utility pole.

• Collision insurance covers the repair of a vehicle if it is damaged or destroyed in a crash with another vehicle or object, not minding whether the policyholder is at fault or not.

• Uninsured insurance covers hit-and-run accidents and bears the cost of your medical and car repair bills if you are hit by someone who does not have auto insurance or does not have enough money to bear the costs of the bills.

• Non-owner insurance only covers liabilities resulting from operating borrowed cars, including injuries and property damages you are responsible for in an accident that is your fault. For example, non-owner insurance covers property damage, medical bills, and legal fees of the other person involved in the accident.However, it does not cover the policyholder's injuries and damages to the vehicle they were driving when the accident occurred.

• Gap insurance covers the difference between what a policyholder owes on their car and it's worth. For example, it covers the remaining part of your car loan if your car is totaled or stolen and you owe more than the car's depreciated value.

Coverages vary significantly between the auto insurance types. When discussing coverages and seeking advice, speak only to state-licensed insurance professionals, who have access to multiple insurers and can quote different insurers side by side.

WHO is Covered by Auto Insurance?

Typically, most auto insurance policies cover the policyholders, their immediate family members, and people driving their cars with their permission. Types of Auto insurance and who they cover include:

• Liability insurance covers the other person involved in an accident and the costs of their bodily injury or property damage if the policyholder caused the accident. However, it does not cover the policyholder and the damages incurred on their car or bodily injuries caused by accident.

• Collision insurance covers the policyholder and the other person involved in a collision, whether the policyholder is at fault or not.

• Uninsured insurance covers the policyholder when they are hit by a person who does not have auto insurance or enough money to bear the costs of the car repair or medical bills.

• Non-owner insurance covers only the persons the policyholder hits during an accident. It does not cover the policyholder's car or medical bills or the medical bills of the policyholder's passengers.

• Gap insurance covers the policyholder if they still owe some money on their car. It covers anyone who chooses a small down payment, a long-term car loan, a very high-interest rate, low monthly payments on their auto loan, or an auto lease (in some cases, gap coverage incorporated in the policyholder's lease agreement.

How to Save on Auto Insurance in Texas?

The Texas Department of Insurance prescribes some suggestions to help individuals cut their insurance costs and save on auto insurance. These suggestions apply in paid off, financed, renter, and non-owner scenarios; they include:

• Speak to a knowledgeable property and casualty insurance professional, who has access to multiple insurers.

A knowledgeable state-licensed insurance agent is able to assess your car insurance needs and can suggest the most optimal solutions to meet them. The more options they are able to produce for you, the more you have an opportunity to save.

• Evaluate your auto coverage to see if it is what you need

Certain auto insurance coverage policies sometimes become irrelevant as time goes on. For example, when a person buys a new car, the car loan lender may require them to purchase comprehensive and collision coverage. However, when the vehicle is paid off and several years old, full coverage may no longer be necessary, reducing the auto insurance costs. A policyholder who does not drive often may ask if their insurance company offers a pay-by-mile policy that would save you money. In addition, some extras like towing insurance, gap insurance, or rental car coverage may become unnecessary for a policyholder at some point. Make sure to always evaluate your auto insurance to be sure you are not paying for what you do not need. Consult with your trusted insurance agent. Review your policy at least once a year.

• Improve your driving record

In paid-off, financed, renter, and non-owner scenarios, a car driving record influences the cost of auto insurance in Texas. A person with a good driving record is more likely to get a better price on auto insurance than someone with speeding tickets, DUIs, or moving violations on their driving records. Such a person can fight the ticket, attend the state-designated traffic school, and pay all applicable fines promptly. They can also avoid more violations being added to their driving records. However, a driver who has no violations on their records can work towards maintaining their good records so it does not negatively impact their car insurance rates.

You can check your driving record maintained by the Texas Department of Motor Vehicles (DMV) to see whether you have a good driving record. The Texas Department of Motor Vehicles maintains a record of each state resident's driving violations and the points on their driving records. If you have points on your driving record, you can take steps like.

• Compare auto insurance quotes from other insurance companies

You can compare auto insurance quotes from different insurance companies using online tools that perform this function. You may be able to get better prices from other insurance companies. Your current auto insurance company may even give you a discount if you let them know you're looking around. However, ensure you first review how much coverage you need before seeking personalized quotes from other insurance companies so there will be a basis for comparison.

• Increase your deductible

To save on insurance in paid off, financed, renter, and non-owner scenarios, you may increase your deductible if directly paying a higher deductible from your purse in the event of filing a claim is convenient for you. Doing this will reduce your insurance costs for your premium. For example, increasing your deductible from $250 to $500 can help you save as much as 20% on your insurance premium. However, ensure to consult with your agent before taking this move. If the cost of fixing your car or the car of the other person involved in the accident is the same price or almost the same price as your deductible, then it may be better not to file a claim. This is because auto insurance companies can raise your future premium after making such a claim. Discuss your decision with a licensed insurance agent.

• Improve your credit score

This particularly applies to persons that purchase financed cars. Make sure your credit score is accurate and does not contain any mistakes. If your credit score contains some errors, ensure you remove them, as this can raise your credit score. You can also improve your credit score by making on-time payments to creditors paying down debt, so you use below 20% of your available credit and not open new accounts. A good credit score can positively impact your auto insurance costs.

• Complete a defensive driving course

Taking a defensive driving course could give you better driver skills, making you a lower risk for car insurance companies to cover. Some auto insurance companies in Texas will offer a discount after you take a certified defensive driving course and submit a confirmation of your completion. This will particularly favor a driver in renter and non-owner scenarios.

• Sign up for driver-monitored savings

You may ask if your auto insurance company offers driver-monitored savings. These programs are designed to lower your car insurance costs based on your driving habits. The auto insurance company monitors your driving daily through technology installed in your car or via your smartphone in this program.

Discuss your insurance needs with licensed professionals. A knowledgeable insurance agent can assess your individual needs and recommend the best fitting options.

Discounts on Auto Insurance

Discounts on auto insurance fall into different categories, including:

• Car condition and upgrades discount

This discount category is given to drivers with new cars or cars with upgraded features. For example, a driver with a new car can get a discount of up to 10% to reduce the cost of their physical damage coverage premium. Likewise, cars with protection and upgraded devices like passive restraint systems, anti-lock braking systems, and daytime running lights may also get some discounts, as these devices can prevent costly damage.

• Combined products/accounts discount

If individuals have multiple insurance policies with an insurance company or multiple assets to protect, they may get discounts on their overall insurance costs. For example, policyholders can get a range of 5% to 25% discounts off the total auto insurance premium for multi policies.

• Actions of the insured

Individuals may get discounts based on actions like early signing up, paying their premium upfront for up to a year or six months, being loyal to their auto insurance companies, or having a good payment history.

• Driver status discount

This category of discount is based on the driver's status and sometimes their driving habits. For example, full-time students who can provide proof of their excellent academic records can get discounts. Also, a senior/mature driver over age 55 may qualify for a discount. People who have served the United States through the military or the state or federal government may get a deal, depending on their records.

To get a discount, you may talk to a professional about your options, get multiple quotes for comparison, and ask as many questions as necessary. In addition, be sure to understand all the exclusions of the policy. (Always read exclusions first).

How Much is Auto Insurance in Texas?

The cost of auto insurance in Texas is not fixed; it is influenced by various factors, including the vehicle type, driver's age, insurance policy coverage, driving record, etc. The costs for the four types of users listed below include:

• Paid off - Drivers in this category are only mandated by the Texas Motor Vehicle Safety Responsibility Act to take the minimum liability coverage. Persons with paid-off cars have the liberty of choosing what coverage they want to add to their mandatory liability auto insurance coverage. Hence, they potentially spend less on auto insurance than persons in other categories.

• Financed - Typically, financing companies in Texas may require persons in this category to have full coverage, which may also include gap insurance, depending on how the loan is structured. For example, a person with a financed car will spend more on auto insurance until they can pay off their car loan.

• Renter - The amount a renter spends on auto insurance solely depends on the extent of coverage they want. A renter may choose to retain their existing liability coverage or add more auto insurance coverages, which will attract more costs.

• Non-owner - A person driving another person's car may not need extra coverage because the car owner's liability coverage covers them. However, the need to get a non-owner insurance coverage policy or extra coverage may arise if they frequently drive other people's cars.

Discuss the cost of insurance with a licensed auto insurance agent, who has access to multiple insurers and can provide a side-by-side comparison.

How to Get Auto Insurance in Texas?

Getting auto insurance in Texas is quite effortless as many auto insurance companies are available to residents. However, it is necessary to do as much research as possible, weighing your options and comparing the available insurance coverages with their prices. In addition to the research you do, talk to the state-licensed insurance professional or other experienced state auto insurance agents to help you find the best (coverages and price) option and make a good decision. Individuals can get auto insurance in Texas via the following methods:

• Online

• Brick and mortar locations of insurance companies

• State-licensed insurance agents

• Referrals