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Paying for Uninsured Car Insurance in Texas

UM/UIM coverage is part of an overall auto policy. It can't be purchased on its own. It's purchased as a bundle. 

Private auto can be paid as a lump sum for the year, but insurance providers usually offer an option of monthly payments. Some insurers do this as a perk for the members (for free), while others may charge a monthly fee (around $5), that will be used to cover their costs to process the bill monthly. 

Your first payment for uninsured/underinsured motorist coverage (UM/UIM coverage) in Texas should be straightforward as your insurance provider/agent will guide you through the process. Subsequent payments should follow the same procedure. You may even ask for help from your insurance provider or agent on how to make subsequent payments after the first one. If you need to switch your payment options, discuss it first with your insurance provider/agent before you proceed. Your policy terms and conditions should state the payment options available. Most Texas insurance companies offer more than one payment option.

You can either pay your UM/UIM coverage premiums through your auto policy bundle lump sum or separately. Prompt payments are important for continued coverage. This article answers your questions about how to pay for UM/UIM coverage in Texas.

How Do I Pay for Uninsured/Underinsured Auto Insurance in Texas?

At the start of your auto insurance policy, your insurance provider/ agent gives clear directives on making your first UM/UIM coverage premium payment in your policy document. Read the document to understand the acceptable payment means and process. Ask an insurance professional for help, if needed.

Some car insurance companies in Texas will give you the option of online payment through secured transaction gateways. Other options include payments via certified or bank cheques. Ask your insurance provider or agent about the different payment procedures available.

Who Pays for Uninsured/Underinsured Auto Insurance?

The insured policyholder typically pays for UM/UIM coverage premiums as part of the overall auto policy.

What are the Payment Options for Uninsured/Underinsured Auto Insurance in Texas?

Most auto insurance companies in Texas offer online and mail-in payment options. An insured may complete premium payments electronically without the help of an agent, usually through an automatic ACH bank transfer or even with a credit card through the insurer’s app on the phone. In-person and mail-in payments are typically done by a paper check.

Commercial auto insurance is usually paid in full or through a 3rd party premium finance company. The business pays back the financier monthly, usually by mailing in a check or through automated ACH withdrawals from the business bank account.

Can I Finance the Uninsured/Underinsured Auto Insurance Cost?

Yes. You can finance the cost of your Uninsured/Underinsured coverage in Texas. The method differs in the type of coverage:

If you have a private auto insurance policy, the insurer usually offers a convenient option to break the annual total into manageable monthly payments. which can be free of charge or can carry a small fee. May be offered as a free service for members, or it can come with an additional monthly fee, usually of up to $10, which offsets the insurer’s costs for processing the payment 11 additional times.

If UM/UIM coverage is for a commercial auto insurance policy, the insurer bills for the full term of coverage. If the business needs to break the full amount into smaller payments, it must use the service of a 3rd party premium financing company, which pays off the annual premium and gives the business a loan to repay with interest. (Speak with a licensed commercial property insurance agent for more details).

Is Premium Financing Available for Uninsured/Underinsured Auto Insurance in Texas?

Yes, premium financing is available for UM/UIM auto insurance coverage in Texas. When it comes to private auto insurance, Texas insurers usually offer convenient payments which are in the form of premium financing, which can be free of charge or carry a small fee as a gesture of free will towards the members, or for a small flat monthly fee (speak to an agent for more details).

How Does Premium Financing Work in Uninsured/Underinsured Auto Insurance?

Unlike private auto insurance, which is usually conveniently offered with monthly, semi-annual, and annual payment options, commercial auto insurance coverage for Texas businesses is usually billed for the full term of the policy, as the lowest cost that a business can pay. Usually, this is a total annual cost. If the business’ cash flow demands a breakdown of the payment into more manageable payments, speak with your commercial insurance agent. The agent will connect your business with the available premium financing companies that will be able to help.

The business applies for a loan with the financing company, which uses this loan to pay off the insurance coverage in full. In most premium financing, the business must make a downpayment in the amount of 15% - 20% of the total loan, with the remaining costs paid off in 10 - 36 months. Longer loans usually have lower payments but higher interest rates and higher overall costs.

How is Premium Financing Different from Other Payment Methods for Uninsured/Underinsured Auto Insurance?

Premium financing differs from the regular premium payment options in that the cost of insurance is spread over multiple payments. In essence, it is a loan that charges an interest rate for the convenience it provides to businesses that frequently cannot afford to pay the annual premium in full, even though it is the cheapest option. Premium financing in uninsured/underinsured auto insurance offers the following benefits:

  • Insureds can save a substantial amount of their business capital, which could have been depleted because of lump sum insurance premium payments

  • It eliminates the requirement for a large upfront payment to an insurance company

  • It improves insureds’ cash flow

  • It ensures that an insured has the required level of insurance coverage without being held back by the upfront cost

  • It makes room for the addition of multiple policies to a single premium finance agreement

How Often is Uninsured/ Underinsured Auto Insurance Paid?

UM/UIM auto insurance in Texas is usually paid either in full, once every 6-month or 1-year term, or every month, through the insurer’s offering or commercial insurance premium financing. See your policy or speak with an agent for more details.

Can New Uninsured/ Underinsured Auto Insurance Cover Old Bills?

No, new UM/UIM coverage cannot cover old bills. Your new Texas UM/UIM coverage will only cover bills resulting from uninsured /underinsured accidents after the date when the policy took effect, and until it expires. For example, an uninsured driver causes a collision with your vehicle and flees the scene of the crime. If at the time of the incident you had no UM coverage and then purchased it the following morning, your new policy will not cover your damages from yesterday's accident.

How Do I Send my Uninsured/Underinsured Auto Insurance Bill?

Check your policy terms for instructions on how to send the payment for a bill you have received from your insurer. The easiest way to send your uninsured/ underinsured auto insurance bill is usually by:

  • Writing a check and sending it through the mail in the included envelope, or

  • Setting up an ACH bank withdrawal, to automate the billing further.

Do I Pay my Uninsured/Underinsured Insurance to an Agent?

No. You should not pay your premiums to an agent. You should pay directly to your insurance provider. You may request the assistance of an insurance agent to guide you through the payment process, at no cost. Captive insurance agents may be authorized by their employers to receive checks on their behalf at an agency location. However, the check must indicate the name of the insurance company and not the personal names of the agent.

Do I Pay Taxes on Uninsured/Underinsured Auto Insurance?

No, you do not pay taxes on UM/UIM coverage in Texas. Rather, the insurance company pays tax from received premiums, which constitutes their income.

Can you Pay Uninsured/ Underinsured Auto Insurance Late?

Yes, it is possible to pay UM/UIM coverage late in Texas. You may escape the late fee penalty if you make your late payments within the stipulated grace period. If you fail to pay within the grace period, you will likely have to pay the reinstatement charges and outstanding premiums to restart the coverage.

It is not ideal to delay premium payments. If it becomes inevitable, contact your insurer/agent in advance. When you do not pay your UM/UIM policy on time, you risk the following:

  • Legal issues: This is especially true if you lose UM/UIM coverage due to the non-renewal of your basic auto insurance policy. You not only risk paying for UM/UIM damages that someone else caused, but risk also violating the law as an uninsured driver yourself.

  • Loss of policy benefits and claims: Insurance companies give out discounts and privileges to less risky and compliant policyholders. When you default on a payment, you risk losing these benefits.

  • Higher cost of premiums: When your insurance provider cancels your policy, you are likely to pay more for a reinstated policy or a new policy with another company.

Does Uninsured/Underinsured Insurance Have a Grace Period?

Yes, UM/UIM coverage in Texas has a grace period. The grace period differs by the insurance company, and it depends on the terms and conditions as stated in your policy document (usually from 10 to 30 days).

What is a Grace Period in Uninsured/Underinsured Auto Insurance?

A grace period in uninsured/underinsured motorist coverage is a timeframe provided by the auto insurance company beyond the set payment date to pay outstanding premiums. It is a protective measure for policyholders not to lose coverage without due notice. Most insurance providers extend this timeframe to 30 days. When your grace period expires, the company will cancel your policy. You will need to pay up your premium and a late fee penalty to reinstate your policy.

What to Do if you Can't Pay for Uninsured/Underinsured Auto Insurance?

If you cannot pay for UM/UIM coverage, you risk losing coverage for accidents involving uninsured/underinsured drivers. If your inability to pay is due to temporary financial hardship, discuss it with your insurance provider/agent ahead of your payment deadline. Discuss your insurance payment situation with a knowledgeable and experienced Texas-licensed insurance agent who can assess your needs and suggest the most optimal options for how you can maintain this needed coverage and still afford it.

If you lose uninsured/underinsured motor coverage, be sure not to lose your basic auto liability insurance. You may still drive your car around with no UM/UIM coverage: you only risk paying for an insurable loss out of pocket. Driving around without your basic auto liability is illegal and may get you in trouble with law enforcement.

Will my Uninsured/Underinsured Auto Insurance Lapse if I Miss a Payment?

No. However, it does if the insured fails to pay within the grace period. If you miss a payment, you can make up for it in the following months within your policy year. If you do not make the payment before the grace period ends, you will likely have to pay an additional fee to reinstate your policy or will have to apply for a policy anew. With 1 out of 5 Texas drivers uninsured, losing UM/UIM coverage at any time is not ideal. Should you get into an accident where the at-fault party is uninsured, you will have to pay for the losses out of pocket.