Every state requires residents to carry auto insurance, and Texas has its own specifics for coverage definitions. Texas law requires drivers to pay for the accidents they are at fault for by maintaining liability insurance. This type of insurance pays to repair or replace the other driver’s car or personal property and pays the medical expenses for any passengers with that individual. The state's financial responsibility law requires all drivers to have a minimum of $30,000 per injured person, a cap of $60,000 per incident and $25,000 per incident for property damage. These coverage details are commonly written in a policy as 30/60/25.
Is Minimum Coverage Enough?
In some cases, the minimum may be enough. However, drivers should never count on their insurance covering all the costs associated with an accident. For example, if a driver was found at fault in an accident involving another car with four occupants and each one required $10,000 for medical care, the coverage would be adequate. However, if each person's hospital bill was $30,000, the driver would still be on the hook for $60,000. Drivers who are found at fault in accidents can be sued for additional medical costs or property damage costs. In the event that a driver is found at fault in an accident where the other party's car is totaled, the property damage limit may not be enough to cover replacement if the car is a luxury vehicle. Keep in mind that liability insurance does not pay for individual expenses. Policyholders must have their own medical, collision and comprehensive insurance policies to pay for their own expenses.
As the name implies, liability insurance is designed to cover a person's obligations to other parties. To enjoy more complete coverage in the event of an accident, it is best to purchase comprehensive and collision policies. For those who have vehicles still on loan from a bank, these two types of coverage are typically required in the terms of the loan.
It is important to understand the provisions of liability insurance in Texas. The following is a simple list of what is covered for other parties:
- Car rental costs if a vehicle must be repaired.
- Vehicle replacement or repair costs.
- Lost wages, medical bills, funeral costs and pain and suffering damages.
- Any court-awarded punitive damages.
Liability insurance also covers the following driving parties and other related fees for the policyholder:
- People driving the policyholder's vehicle with his or her permission.
- The policyholder and his or her family members in the same household.
- The policyholder's spouse living elsewhere during a separation.
- Family members enrolled in school and living away from home.
- Attorney fees if the other party sues.
- Up to $250 for bail if arrested following an accident.
This type of coverage is not required by state law in Texas. If a car is lost or stolen, the cost of replacing or repairing it is covered. Damages from falling objects, hail, vandalism and fire are also covered. Unless it is reported to the police, theft is not covered. Comprehensive covers most damages aside from those sustained by a collision.
Collision insurance pays for replacing or repairing the policyholder's vehicle after an accident. The policy pays market value minus the cost of the deductible. Family members, other permitted drivers and the policyholder are all covered.
There are several other types of auto insurance Texas drivers can purchase. To save money, ask an agent about discounts for multiple policies. Many companies offer discounts when a person purchases home insurance or another type of insurance product along with auto coverage. For more information about the various types of auto and other policies, talk to a trusted Texas insurance agent.