Texas Auto Insurance: Understanding State Minimum Requirements

Texas state law requires all drivers to have a minimum level of auto insurance, referred to as 30/60/25 coverage. This means that drivers must have at least $30,000 in liability coverage for each injured person, up to a total of $60,000 per accident, and $25,000 for property damage per accident. This basic coverage is to protect drivers financially in the event of an accident, covering the cost of repairs and medical bills.

Liability insurance

Texas law requires drivers to show proof that they can pay for any accidents they cause. Most drivers do this by purchasing auto liability insurance. Liability insurance covers the cost of repairing or replacing the other driver's car and pays for other people's medical expenses if you are at fault in an accident. It also covers legal defence expenses if you are sued as a result of a covered accident.

The state of Texas requires motorists to have a minimum of $30,000 in liability coverage for injuries per person, up to a total of $60,000 per accident, and a minimum of $25,000 of coverage for property damage. This is called 30/60/25 coverage. However, it is important to note that the minimum liability limits might be too low if you cause a multi-vehicle accident or the other driver's car is totaled. If you don't have enough liability coverage to pay for the damages and injuries you cause, you might have to pay the rest out of your own pocket, and the other driver could sue you.

In Texas, there are two types of liability coverage that insurance policies must include: property damage and bodily injury. Property damage liability coverage safeguards your assets if you are found legally responsible for a covered accident, including certain damage you may cause to the property or vehicle of another party. Bodily injury liability coverage, meanwhile, safeguards your assets if you are found legally responsible for a covered accident, including certain expenses associated with bodily harm sustained by the other parties.

Collision coverage

If you still owe money on your car, your lender will require you to have collision and comprehensive coverage. If you cancel or lose these coverages, your lender will buy single-interest coverage and add the cost to your loan payment. This coverage is expensive and only protects the lender.

Comprehensive coverage

The cost of comprehensive coverage varies depending on personal factors such as age, gender, and driving record, as well as the vehicle and location within Texas. In Houston and Dallas, for example, the average annual premium for comprehensive coverage ranges from under $150 to over $250.

When considering whether to purchase comprehensive coverage, it's important to evaluate the value of your vehicle, your driving habits, the local environment, and your financial situation. If your vehicle is damaged or totaled, comprehensive coverage can help you avoid a financial headache by covering the costs of repairs or replacement.

Uninsured/underinsured motorist coverage

In Texas, 1 in 12 drivers do not have auto insurance. If you are in an accident with an uninsured driver, uninsured motorist (UM) coverage will protect you and your property. Underinsured motorist (UIM) coverage will protect you if the at-fault driver has insurance but not enough to cover all the damage.

Uninsured motorist coverage also helps pay for hit-and-run damages when the driver cannot be found. Underinsured motorist coverage steps in when the at-fault driver’s liability limits are too low to cover all of the damages. Overall, this type of coverage ensures that you are not stuck paying for medical expenses or vehicle repairs that are not your fault.

In Texas, insurance agents are required to offer you both types of coverage. If you do not want it, you must submit a denial in writing.

• Car repairs and to replace the property in your car
• A rental car if you need it
• You and your passenger’s medical bills
• Pain and suffering costs
• Diminished value if your car is worth less after the accident

The deductible for uninsured/underinsured coverage is $250. You can usually add more coverage in $5,000 increments.

Personal injury protection

In Texas, PIP coverage includes reasonable medical costs, rehabilitation therapy, lost income resulting from the accident, and replacement of necessary services provided by the injured party, such as family care or household maintenance, if the injured person is not an income producer. Texas requires insurance companies to offer every driver at least $2,500 of PIP insurance. You can typically increase your coverage to $5,000 or $10,000 if you want additional financial protection.

While PIP is not mandatory, it is strongly recommended for Texas drivers. PIP insurance protects you when you're hit by a driver who flees the scene (hit and run) or when you're hit by a driver who does not carry the legally required insurance (uninsured or underinsured drivers). It also protects you in the event you cause either a single-vehicle accident or an accident with another person or vehicle. Unlike liability insurance, claiming PIP does not cause your insurance rates to rise.

If you reject PIP coverage in Texas, you'll still be covered by the other driver's liability insurance if they are at fault in the accident. However, if you are at fault for the accident and don't have PIP coverage, insurance won't help you pay any resulting medical expenses for yourself or your passengers.

Frequently asked questions