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RMC Insurance Services
Auto
Insurance > Types
Types of Auto Insurance in Texas
Texas law requires you to have auto liability
insurance, and if you still owe money on your car, your
lender requires that you also carry collision and
comprehensive coverage. Auto insurance pays for
damages, injuries, and other losses specifically
covered by your policy. Read your policy carefully to
know exactly what it covers. Pay special attention to
the exclusions section, which lists the things your
policy doesn't cover. The front page of your policy is
called the declarations page. It contains useful
information such as the exact name of your insurance
company, your policy number, and the amount of each of
your coverages and deductibles.
Texas has an automobile insurance Consumer Bill of
Rights. Your company must send you a copy with your
policy or policy renewal. Take time to read it to fully
understand your rights under Texas law.
Texas Requires Proof of Financial
Responsibility!
If you drive in Texas, you must show that you can
pay for accidents you cause. Most Texas drivers do this
by buying auto liability insurance. Texas law requires
minimum coverage of $20,000 per injured person, up to a
total of $40,000 for everyone hurt in an accident, and
$15,000 for property damage. This basic coverage is
called 20/40/15 coverage. However, basic coverage might
not be enough if you are held liable for an accident.
You should consider buying more than the basic limits.
When you buy an auto policy, your insurance company
will send you a proof-of-insurance card. You will have
to show proof of insurance when you
- are asked for it by a law enforcement officer
- have an accident
- register your car or renew its registration
- obtain or renew your driver's license
- get your car inspected.
Texas law provides severe penalties for violating
the state's financial responsibility laws. A first
conviction will result in a fine between $175 and $350.
Subsequent convictions could result in fines of $350 to
$1,000, suspension of your driver's license, and
impoundment of your automobile.
Auto Insurance Coverages
The Texas Personal Automobile Policy offers eight
types of coverage. Texas law requires you to have basic
liability coverage. The other coverages are optional,
but if you still owe money on your car, your lender
will require you to have collision and comprehensive
coverage. The following describes the eight types of
coverage available in the Texas Personal Automobile
Policy. Auto insurers may offer alternative policies if
approved in advance by TDI.
Liability Coverage
Pays: Other people's expenses
for accidents caused by drivers covered under your
policy, up to your policy's dollar limits. These
may include the other person's
- medical and funeral costs, lost wages,
and compensation for pain and suffering
- car repair or replacement costs
- auto rental while their car is being
repaired
- punitive damages awarded by a court.
Liability insurance also pays attorney fees if
you are sued and bail up to $250 if you are
arrested.
Covers: You, your family
members, and other people driving your car with
your permission, even if they don't have their own
liability insurance and are not named on your
policy. You and your family members also are
covered when driving someone else's automobile -
including a rental car - but not a car that you
don't own but have regular access to, such as a
company car.
Who qualifies as a family member?
Your auto policy covers your spouse, blood
relatives, in-laws, adopted children, wards, and foster
children living in your home, even if not named on the
policy. Family members attending school away from home
and a spouse living elsewhere during a marital
separation also are covered.
Medical Payments Coverage
Pays: Medical and funeral bills
arising from accidents, including those in which the
victim was a pedestrian or a bicyclist.
Covers: You, your family members,
and passengers in your car, regardless of who caused
the accident.
Personal Injury Protection
(PIP) Coverage
Pays: Same as medical payments
coverage, plus 80 percent of lost income and the cost
of hiring a caregiver for an injured person.
Covers: You, your family members,
and passengers in your car, regardless of who caused
the accident.
An insurance company must offer you $2,500 in PIP,
but you can buy more. If you don't want PIP, you must
reject it in writing.
Uninsured/Underinsured
Motorist (UM/UIM) Coverage
Pays: Your expenses from an
accident caused by an uninsured motorist or if the
other driver did not have enough insurance to cover
your bills, up to your policy's dollar limits. Also
pays for accidents caused by a hit-and-run driver if
you reported the accident promptly to the police.
- Bodily injury UM/UIM pays without deductibles
for medical bills, lost wages, pain and suffering,
disfigurement, and permanent or partial
disability.
- Property damage UM/UIM pays for auto repairs,
a rental car, and damage to items carried in your
car. There is an automatic $250 deductible. This
means you must pay up to $250 of the repairs
yourself.
Covers: You, your family members,
passengers in your car, and others driving your car
with your permission.
Insurers must offer UM/UIM coverage, but you can
reject it in writing.
Collision (Damage to Your
Car) Coverage
Pays: The cost of repairing or
replacing your car after an accident, regardless of who
was driving or who was at fault. Payment is limited to
your car's actual cash value, minus your deductible.
Actual cash value is the market value of a car like
yours before it was damaged.
Comprehensive (Physical
Damage Other than Collision) Coverage
Pays: The cost of replacing or
repairing your car if it is stolen or damaged by fire,
vandalism, hail, or another cause other than collision.
Comprehensive coverage also pays for a rental car or
other temporary transportation if your car is stolen.
Your policy won't pay for an auto theft unless you
report it to the police. Payment is limited to your
car's actual cash value, minus your deductible.
Towing and Labor Coverage
Pays: Towing charges when your car
can't be driven. Also pays labor charges, such as
changing a tire, at the place where your car broke
down.
Rental Reimbursement
Coverage
Pays: A set daily amount for a
rental car if your car is stolen or is being repaired
because of damage covered by your policy.
Coverage of New or
Additional Automobiles
If you buy a new or additional car, your policy will
automatically cover it, but there are certain
limitations you should be aware of.
An additional car automatically has the same
coverage as the car with the broadest coverage provided
by your policy. For example, if you have two cars - one
with liability coverage only and one with liability,
collision, and comprehensive - and you buy a third car,
the third car will automatically have liability,
collision, and comprehensive coverage.
A replacement car automatically has the same
coverage as the car it replaced. For example, if you
trade in an older car that only had liability coverage,
the new car will automatically have only liability
coverage.
Be sure to notify your insurance company as soon as
possible that you have added or replaced a car and
which coverages you want. You could lose coverage on
the new car if you wait longer than 30 days. |
