Texas Car Insurance

If you live in the Lone Star State, it's your responsibility to pay for all of the damage that you cause while you're behind the wheel of a car. Since not all vehicle owners have the financial resources and assets that they need to pay for damages on their own, state officials have mandated that all vehicle owners must buy sufficient car insurance coverage.

It's your duty as the registered owner of a Texas vehicle to know the law and to comply with it.

You can either access a whole bunch of guides to gather all of the information that you need, or you can get everything that you need in this handy guide for Texas shoppers looking for affordable insurance that don't want to compromise their protection. Use our FREE tool above to compare car insurance rates now!

Texas Operates Under a Tort Insurance System

There are two different types of auto insurance systems in the United States: tort systems and no-fault systems. In states with a tort-based system, the at-fault party's responsibility to pay for the damages that they cause. Since Texas operates under tort law, all vehicle owners must have liability insurance that'll pay when they're at-fault in a loss.

What are the coverage requirements in Texas?

Since states regulate insurance requirements, every state has different rules. This is the case even when the state has the same type of insurance system. Like all states with tort-based insurance laws, you're required to carry third-party liability insurance to satisfy financial responsibility laws. Here's a breakdown of these requirements:

• Bodily Injury Liability (BI): Bodily Injury coverage covers your legal liability to another party when you injure them in a car accident. Your coverage will only pay third-party bills when you're to blame for the accident. The Bodily Injury limits that you must carry as a Texas resident are as follows: $30,000 per person, up to $60,000 per accident

• Property Damage Liability (PD): Property Damage is another third-party liability coverage that pays when you're to blame for property damage. The policy will pay up to your limits to repair or replace real property that you don't own but that you damage. Here's the Texas limit requirement: $25,000 per accident (not per vehicle or per object)

How is auto insurance coverage verified?

Years ago, you could get away with driving without insurance in the Super-American State until you were pulled over by law enforcement. Now, you don't even need to come into contact with law enforcement to get caught breaking the law. That's because of a new and intelligent electronic verification system called TexasSure.

TexasSure is the state's financial responsibility verification program that all insurance carriers must report to. Under Senate Bill 1670, it was written into law that an electronic program must be used to verify if cars have insurance at all times.

TexasSure has helped cut down the uninsured driver rates in the state.

It's the insurer's duty to report policy cancellations, non-renewals, and new policies as soon as they take effect. The purpose of the insurer obligation is to ensure that the state can always keep up with who's insured and who's not. It doesn't take a police officer or the court to penalize drivers any longer.

What is the penalty for driving without Texas insurance?

If you're willing to drive in busy Texas traffic without carrying auto insurance, you're also willing to pay the penalties that are enforced to uninsured drivers. Your penalty for driving with lapsed insurance depends on whether you're caught by law enforcement or if you're caught in the verification system. Here are some of the costs:

• First-time offenders who're cited by law enforcement face a fine of up to $350
• Multiple offenses could result in a fine of up to $1000 and vehicle impoundment
• If you're a repeat offender who's charged for driving without insurance, you could have your license suspended for up to 2 years
• If the verification system shows a lapse of coverage, your license plate or driving license can be suspended
• Not only must you pay a reinstatement fee, you'll also have to satisfy an SR-22 requirement for 3 years
• You could face jail time if you're caught violating the law several times
• Many drivers with no insurance convictions are labeled high-risk by auto insurance companies

Is there a high rate of uninsured drivers in Texas?

You'd think that drivers would buy at least a minimum amount of coverage to avoid some of the serious penalties that are enforced for being without insurance. Unfortunately, many Texans still choose to put others at risk by driving with absolutely no liability coverage. The rate is going down but the number is still much higher than the state wants.

According to the most recent statistics released by the Insurance Research Council, Texas has the 13th highest rate of uninsured motorists in the state.

Since around 13.3% of the drivers in the state has no insurance at any given time, it's fair to say that protecting yourself with optional first-party coverage is important. Without the protection, you're stuck paying your own bills.

What is Personal Injury Protection?

One thing that makes Texas unique is that it's a state with tort-based systems that still offers vehicle owners the option to buy Personal Injury Protection. Personal Injury Protection (PIP) is usually available in no-fault states and offers you first-party protection that pays for your medical bills and loss of income.

Since it's a no-fault coverage, the benefits are paid regardless of who causes the accident. The coverage will pay out to you, listed drivers, and other passengers in your vehicle. In Texas, insurers must offer you a minimum of $2500 in coverage. You, as a consumer, are free to reject the coverage in writing if you don't want it.

Is Uninsured Motorist Coverage a requirement?

Like Personal Injury Protection, Uninsured Motorist Coverage protects you by paying for your damages. The coverage only activates when you're in a hit-and-run accident, when the other party has no insurance, or when they have insurance but the limits won't cover all of your bills. In some cases, fault will be considered.

In Texas, state law says that companies must offer you Uninsured Motorist in limits that match your Bodily Injury coverage.

Even though you have to be given the option to buy it, you're free to reject it in writing if you feel like it's something that you don't really need or you can't really afford.

Do you need Uninsured Motorist Coverage?

Texas has a population of around 24 million registered vehicles. Since around 13% of these are not insured, it's fair to say that there are 3.12 million cars that don't have insurance on the roads in Texas at any given time. Having UM coverage can help you pay your bills if you're unfortunate enough to come into contact with one.

How do you choose the right liability limits?

If you buy the minimum liability limits, you don't have to worry about complying with state law but you do have to worry about having enough coverage to protect your financial future.

Before you automatically take the minimum limits, it's in your interest to compare the costs for higher limits to see if you can afford them.

Most agents that have your best interest in mind will recommend that you buy at least $100,000 per person/$300,000 per accident in Bodily Injury and $100,000 per accident in Property Damage. While you're never guaranteed to have enough insurance, these limits better protect you in accidents where there could be a catastrophic injury.

How to Choose a Carrier

If your car is registered in Texas, you're obligated to buy insurance from a carrier licensed to sell products by the Texas Department of Insurance. Not all carriers are created equal throughout the state. There are companies that are good about paying claims and there are companies that have earned a good reputation. Here's what you should consider:

• Financial rating and security reports that are reported by AM Best or Standard and Poor's
• Complaint record with Department of Insurance in Texas
• Claims satisfaction rating through consumer agencies
• Customer satisfaction
• Product offerings that are available through the same company

If it's time to buy insurance, don't select the first policy quote you're given. It might be a competitive quote but you won't know until you thoroughly shop the market. The most effective way to do a thorough comparison is to use an intelligent online quoting tool. Compare limits and rates, and then buy a plan from an insurer you can trust. Enter your zip code in our FREE tool below to compare car insurance rates now!