Types of Texas Auto Insurance Coverage - Part 1
The following are the basic types of coverage you can expect to encounter as you are shopping for auto insurance in Texas. It is a good idea to familiarize yourself with the terminology and definitions before shopping for a policy, so that you will be able to more accurately compare one policy with the next.
Liability Coverage
Liability coverage pays for damages to the person and property of the victim of an accident for which you (or any driver covered in your policy) are shown to be responsible. Payment will only be made up to the dollar limits defined in your policy. In other words, if you have purchased the minimum coverage required by law in Texas (20/40/15), and the medical expenses incurred by one of the victims of an accident for which you are responsible is $50,000, you will be held liable for $30,000. If you are unable to pay this amount, the victim may choose to sue you for the remaining amount. Liability insurance will pay attorney fees if you are sued, and bail up to $250 if you are arrested.
The types of expenses liability coverage will pay to the victim(s) include the following:
- 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.
Who is covered?
According to Texas state law, a liability insurance policy covers anyone who is driving the car named in your policy, with your permission, even if the person does not have his/her own liability insurance or is not named on your policy. Your policy will also cover you and your family members when driving another person's automobile, including a rental car. However, your policy will not cover you while driving a car that you do not own, but have regular access to, such as a company car.
Texas auto insurance law defines a family member as a spouse, blood relative, in-law, adopted child, ward, or foster child living in your home (even if not named on the policy.) Family members attending school away from home or a spouse living elsewhere during medical separation are also covered under this definition.
Medical Payments Coverage
Medical payments coverage pays medical and funeral bills resulting from accidents, including those in which the victim is a pedestrian or bicyclist. Medical payments coverage in Texas covers you, your family members and passengers in your car, regardless of who is ultimately held responsible for the accident.
Personal Injury Protection (PIP) Coverage.
Personal Injury Protection (PIP) Coverage in Texas is the same as Medical Payments Coverage, plus 80% of lost income as well as the cost of hiring a caregiver for an injured person. As with Medical Payments Coverage, you, your family members, and passengers in your car are covered regardless of who caused the accident.
Insurance companies in the state of Texas are required by law to offer you Personal Injury Protection of at least $2,500 when selling you a policy. PIP must be rejected in writing, if you choose to waive this coverage.
Uninsured/Underinsured Motorist (UM/UIM) Coverage.
Uninsured/underinsured motorist (UM/UIM) coverage pays for the expenses arising from an accident due to a lack of insurance, or inadequate insurance on the part of the person who caused the accident. As with liability insurance, UM/UIM coverage comes with policy limits which you must agree to before purchasing a policy. UM/UIM coverage also pays for the expenses resulting from hit-and-run accidents, provided you promptly report the accident to the police.
There are two types of uninsured/underinsured motorist coverage offered in Texas:
- 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.
This type of policy covers you, your family members, passengers in your car, and others driving your car with your permission.
As with PIP, insurers must offer UM/UIM coverage, but you can reject it in writing.
Continue: Types of Texas Auto Insurance Part 2>>
