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Texas Car Insurance Basics

Before you purchase any car insurance plan, it is important to know the car insurance basics for the state you live in, as well as to understand some fundamental things about car insurance itself. That way, you can make sure any policy you purchase is legal and will allow you to register your vehicle and drive on the state's roads.

Texas, like most other states, has some basic car insurance requirements as well as some laws pertaining to car insurance. While this information may seem daunting to you now, any car insurance company, agent, or broker in the state will be able to help you understand it and be sure that your policy follows the guidelines.

Texas Car Insurance Minimums

Texas is a 25/50/25 state. This means that you must have a minimum of $25,000 in bodily injury liability coverage for one person injured in an accident you caused, $50,000 for more than one person injured, and another $25,000 in property damage liability coverage per accident.1 Without proof that you have insurance in these minimal amounts, you will not be able to register your vehicle or renew your registration on an existing vehicle.

Bodily injury liability insurance is insurance that will cover someone who is hurt in an accident that you cause. Note that, while this coverage will sometimes cover passengers in your vehicle, it is mostly for any other injured parties, such as people in another vehicle or pedestrians who end up involved in the accident.

Property damage liability insurance is similar to bodily injury liability insurance except that it covers damage done to property in an accident you cause. Usually, this property is another vehicle that you hit or cause to hit something else. However, this insurance will normally cover damage to other kinds of property as well, like to a building, landscaping, fencing, etc.

These minimal amounts will be raised as of January 1, 2011. At that time, TX will require all drivers to carry a minimum of $30,000 in bodily injury liability insurance for one person, $60,000 for more than one person, and $30,000 in property damage liability insurance.2 If you don't want to mess with updating your policy later, you might want to purchase insurance at these coverage levels now, so you don't have to remember it later.

If you cannot afford these Texas insurance minimums or have been denied coverage multiple times, the state offers a safety net if you qualify. The Texas Automobile Insurance Plan Association (TAIPA) offers minimal insurance plans to those who cannot get coverage elsewhere. To contact them and get more information, call (800) 580-TAIP.

Note that, while this is all the insurance that most drivers are required to carry in Texas, the driver of the vehicle deemed at-fault in an accident is responsible for damages above and beyond the limits of their insurance policy. Thus, if you cause an accident where someone's medical bills total $75,000, you can be personally liable for the $50,000 that is not covered by your minimal insurance policy. Thus, it may be wise to purchase insurance above and beyond these minimums in Texas.

In addition to these minimal amounts of insurance, anyone leasing or making payments on a car in TX is required to carry whatever insurance their leasing or lending company requires them to carry. Generally, this includes total collision and comprehensive insurance, though some companies will also require gap insurance or other physical damage insurance as well.

Make sure you read any contract covering automobile insurance carefully, as Texas will honor these contracts and allow the lessor or lender to enforce any consequences outlined in the contract if they find that you do not have the proper coverage. This can include revoking your lease or loan, or purchasing the insurance for you and billing you. Since these companies won't search for the best price, this is not a good choice for most drivers.

Texas Car Insurance Laws

Texas requires you to have proof of your insurance, usually in the form of ID cards that the insurance company will give you, to do several things. In addition to needing these in order to register your vehicle or renew your registration, you need proof of insurance when you have an accident, are requested to show it by a police officer or other law enforcement official, want to get or renew your driver's license, or get a car inspection.

You still must carry proof of your vehicle insurance coverage even though insurance companies are required to report coverage types and amounts, as well as any changes in coverage, to the state electronically. Many police cars have been fitted with a computer that can access this information at any time, so officers can pull you over or give you an additional ticket if they have pulled you over for something else if they find out your coverage is not correct.

If you are found to not have insurance coverage or not have enough in Texas, you will face a fine that is usually between $175 and $350 for a first-time violation. If you continue to refuse to carry the minimal amounts of insurance, you can face fines up to $1,000, having your vehicle impounded, and the suspension of your driver's license.3 If this last happens, your insurance company will need to provide the state with a Texas SR22 Insurance form before you can get our license reinstated.

The Texas Department of Insurance does have a Bill of Rights in place to govern the conduct of insurance companies in the state. While there are a lot of details covered in this document, there are a few major interesting points. This Bill of Rights states that no insurance company can deny anyone automobile insurance coverage in the state solely based on information about your credit. This means that, while insurers can access your credit report and history and include this information when they consider your rates, they must consider other factor when they decide whether or not to issue a policy.

In addition, this Bill of Rights states that, in case you are denied car insurance coverage by a particular company, you have the right to receive, in writing, a detailed statement including precise information about why you were denied and where the insurance company got that information. If you are denied coverage and not given this statement, you have the right to request it at any time.

Finally, the Bill of Rights states that you have a right to be able to pay your for your car insurance coverage in installments. These should be according to a plan you work out with your insurance company, but any down payment cannot be more than the cost of two monthly payments. This should make car insurance affordable for everyone.

You should now have all the information you need to purchase a car insurance policy that meets Texas' basic requirements, and you should be familiar with the basic laws that surround car insurance in the state. If you have further questions, contact your own car insurance company or the Texas Department of Public Safety's website at






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