As a responsible driver, it is important to have auto insurance to protect yourself, your passengers, and your vehicle in case of an accident. Auto insurance is also required by law in most states, including Texas. But what exactly is auto insurance and how does it work?
What is Auto Insurance?
Auto insurance is a contract between you and an insurance company. When you pay a premium, the insurer agrees to cover your financial losses in case of an accident. Coverage may include vehicle damage, medical expenses, and liability for injuries or damages caused to others. Depending on your policy, it can also cover theft or non-collision-related damage.
Is Auto Insurance Required in Texas?
Texas law mandates that drivers must prove financial responsibility for the accidents they cause. Most drivers meet this requirement through liability insurance. This coverage pays for damage to other vehicles and property, as well as medical expenses when you’re at fault.
In addition to liability, it is often advisable to have collision and comprehensive coverage. Lenders usually require both if you still owe money on your car.
Types of Auto Insurance Coverages
Liability Coverage
This pays for damages and injuries you cause in an accident. Texas requires a minimum of $30,000 per person, $60,000 per accident, and $25,000 for property damage. Consider buying more than the minimum to avoid out-of-pocket expenses.
Collision and Comprehensive Coverage
Collision coverage pays for repairs or replacement if your vehicle is damaged in a crash. Comprehensive coverage protects against theft, fire, flood, or vandalism.
Medical Payments and Personal Injury Protection (PIP)
Medical payments cover medical expenses for you and your passengers. PIP also covers lost wages and other non-medical costs. Texas policies include PIP unless declined in writing.
Additional Coverages
- Uninsured/Underinsured Motorist: Covers you if the at-fault driver has insufficient or no insurance.
- Towing and Labor: Covers roadside services.
- Rental Reimbursement: Pays for rental cars while yours is repaired or replaced.
Who and What Does My Policy Cover?
Policies typically cover you, your family, and anyone driving your car with permission. Specific coverages depend on the policy, so it’s important to confirm with your insurer.
Your policy may cover accidents in other states or Canada, but not in Mexico. It usually does not cover damage while driving for delivery or ride-share services.
Coverage for New or Borrowed Cars
A new car is automatically covered for about 20 days. If it’s a replacement, it receives the same coverage as the old vehicle. An additional vehicle gets the highest coverage listed in your policy.
Rental cars may be covered under your policy. Borrowed cars are typically covered by the owner’s insurance. If the owner has no insurance, yours may apply.
Driving into Mexico
U.S. policies aren’t recognized in Mexico. You’ll need a separate Mexican insurance policy for legal coverage.
Deductibles and Dollar Limits
Some coverages require you to pay a deductible before insurance pays. Liability, PIP, and towing coverage also have maximum payout limits.
Check your policy’s declaration page for a summary of your coverages, limits, and deductibles.
Auto Insurance for Young Drivers
Add young drivers to your policy or get them separate coverage. Tell your insurer when a family member starts driving to avoid issues. Premiums depend on who primarily drives which car.
Notify your insurer if a child moves for school. Rates may change based on where the car is located. Discounts may apply if the child doesn’t have a vehicle.
Understanding Premiums
Premiums are influenced by driving record, location, vehicle type, credit score, and claims history. Companies use CLUE reports to assess your risk profile.
Your Rights and Discounts
Insurers cannot discriminate based on race, religion, or national origin. You may qualify for discounts for having safety features, good driving history, or bundling policies.
Cancellations and Nonrenewals
Companies must notify you before canceling or nonrenewing your policy. If this happens, shop for new coverage right away.
Texas Automobile Insurance Plan Association (TAIPA)
If you’re denied coverage by two insurers, TAIPA can provide basic coverage. This is generally more expensive and offers fewer options.
Filing Auto Claims
Gather all necessary information from the accident scene, notify your insurer promptly, and keep documentation like medical bills and repair estimates.
After You File a Claim
Insurance companies must acknowledge your claim within 15 days, inspect damages, and pay promptly. If they deny the claim, they must explain why in writing.
Repair and Settlement
You’re entitled to a fair repair estimate and may negotiate your car’s value if totaled. Gap insurance helps if your car’s value is less than what you owe.
Rental Car and Medical Claims
You may qualify for a rental car if the accident wasn’t your fault. For medical claims, consult a doctor and evaluate the insurer’s offer before signing a release.
Final Thoughts
Your insurance needs may evolve, so review your policy regularly. For guidance or legal help filing a claim, contact Adam Miller, The Texas Bulldog, at 713-572-3333. You’ll never pay unless he wins or settles your case. Contact a Houston Accident attorney by filling out our form online for a free consultation. We think we are the best attorneys in town, but don’t just take our word for it. Check out our countless ⭐ ⭐ ⭐ ⭐ ⭐ 5 Star Reviews on Google!