Texas law requires people who drive in Texas to pay for the accidents they cause. Most drivers do this by buying auto liability insurance. Liability insurance pays to repair or replace the other driver’s car and pays other people’s medical expenses when you’re at fault in an accident.
If you buy insurance to meet the state’s financial responsibility law, you must buy at least the minimum amount. The current minimum liability limits are $30,000 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 called 30/60/25 coverage.
Because of car prices and the high cost of medical care, the minimum amounts might not be enough to pay all of the other driver’s costs if you’re at fault in an accident. Other drivers could sue you to collect the difference. Consider buying more than the minimum limits to protect yourself financially.
Liability insurance doesn’t pay to repair or replace your car or to treat your injuries. Other types of coverages – such as personal injury protection, uninsured or underinsured motorist, medical payments, collision, and comprehensive – can help you pay for these expenses.
Proof of Financial Responsibility
When you buy an auto policy, your insurance company will send you a proof-of-insurance card. You must show the card when you:
- are asked for it by a police officer,
- have an accident,
- register your car or renew its registration,
- get or renew your driver’s license, and
- have your car inspected.
Know Your Rights
Texas has a Consumer Bill of Rights for auto insurance. Your insurance company must send you a copy with your policy. Read it to understand your rights under Texas law.
Auto Insurance Coverages
Depending on the types of coverage you have, auto insurance pays for car repair or replacement, medical expenses, rental cars, towing, court costs, and other expenses.
Read your policy carefully because coverages vary. Pay special attention to who and what is covered by your policy. Also note the exclusions, which are the things your policy doesn’t cover. The following are some common exclusions:
- Named driver. Some policies cover only household residents specifically named on the policy.
- Excluded driver. Excludes coverage for people specifically named in an endorsement to your policy.
- Racing. Excludes coverage if you use your car in a racing event.
- Ride-booking. Most policies exclude coverage when you’re using your car for a ride-booking service like Uber or Lyft. Some insurance companies offer policies specifically for drivers for ride-booking companies.
- Intentional acts. Excludes coverage for losses that were intentional.
The front page of your policy – called the declarations, or dec, page – shows the exact name of your insurance company, your policy number, and the amount of your coverages and deductible.
Many insurance companies use the Texas Personal Automobile Policy, a standardized policy form that offers eight types of coverages. Companies may sell other policies that the Texas Department of Insurance (TDI) has approved. Some of these policies have more limited coverage. The following summary can help you understand the eight basic auto coverages (please note that your coverages may be different, depending on the type of policy you buy).
- Liability Coverage (basic liability coverage meets the state’s financial responsibility requirement.)
- Collision Coverage (for damage to your car)
- Comprehensive Coverage (other than collision)
- Medical Payments Coverage
- Personal Injury Protection (PIP) Coverage
- Uninsured/Underinsured Motorist (UM/UIM) Coverage
- Towing and Labor Coverage
- Rental Reimbursement Coverage
Note: The deductible is the amount you must pay before your insurance company will pay. For example, if you have a claim for $1,000 and a deductible of $300, the insurance company will automatically deduct $300 from the amount it pays you.