Texas Auto Insurance Quotes and Coverage Guide

Texas Motor Vehicle Insurance Questions & Answers

Q: Is auto insurance mandatory?

A: It’s Where the West Begins, but we try to downplay the “wild, wild” part by requiring proof of financial responsibility for anyone who drives an automobile in the state. Most (tame)Texans choose to purchase liability insurance to meet this requirement.

Q: Is Texas a "no-fault" state?

A: Kinda sorta. Texas is what is known in the insurance biz as an “add-on” state. In add-on states, drivers receive compensation from their own insurance company as they do in no-fault states, but there are no restrictions on lawsuits. In other words, you can still get your chaps sued off if you cross that cattle guard and smack the Mack truck you somehow didn’t see coming right toward you.

Q: What type of insurance is required to purchase and maintain a Texas tag and registration?

A: Liability insurance pays for bodily injuries, property damage, and rental car expenses for which a driver covered by your policy is legally responsible. The minimum liability insurance required by law is $20,000 bodily injury per person, $40,000 bodily injury per accident, and $15,000 for any cows the cattle guard didn’t guard when you crossed it and hit one of them before you hit the Mack. This is commonly called "20/40/15" coverage. Liability insurance also pays attorney fees if you are sued and bail up to $250 if you are arrested for being a REALLY wild, wild Texas driver.

Q: What are some of the things that affect my premiums?

A: Companies may use a number of criteria to establish your individual premium. These include:

-- Your age, and for younger drivers, your marital status: Male drivers under 25 and unmarried women under 21 have the highest rates (the wildest Texans). Drivers over 50 may get discounts (considered tame – sometimes).

-- Your driving record and claims history: A good driving record can save you money. If you have accidents or tickets on your driving record, you’ll likely be placed in a nonstandard company, which charges higher rates. In addition, companies can add penalties – called surcharges – to your premium for major driving offenses and accidents resulting in property damage of $1,000 or more. Surcharges are mandatory for rate-regulated companies and stay on your premium for three years – which gives you a chance to tame down a little.

-- The county where you keep your car: Because urban counties have more accidents, auto thefts, and wilder Texans, their rates tend to be higher than those of rural areas.

-- The type of car you drive: Collision and comprehensive rates are highest for luxury, high-performance, and sports cars – the kind most wild Texans like to drive. Rates may also be higher for cars that damage easily or cost more to repair than others – the kind rich, wild Texans like to drive.

-- How you use your car: Rates are higher for cars driven to and from work or used for business – because Texans have to drive forever to get anywhere.

-- Your credit score: Companies may take a look at your cowboy boots and consider your credit score when deciding whether to sell you a policy and what to charge you. However, a company cannot refuse to sell you a policy, cancel, or not renew your policy solely on the basis of your credit or the price of your boots.

-- Whether you drove uninsured in Texas: Companies can charge more if you drove uninsured in Texas for more than 30 days in the 12 months before you applied for insurance. Driving cattle is not considered. However, a company cannot otherwise charge you a higher rate for liability coverage because of your prior lack of coverage.

Q: Is there any way I can save on a basic liability policy?

A: Yes. Defensive driving and driver education courses for young drivers can save you 10% off your premiums, and having two or more cars on a policy can discount it by 20 percent. Both discounts are mandated by state law, so don’t forget to ask your insurer about them – but don’t bring up the wild/tame thing.

Q: I had a wreck, and now my insurer is canceling my policy. Is that legal?

A: Depends on what you did or didn’t do, and whether or not the company’s tryin’ to pull a fast one on you. A company must explain in writing its reasons for declining, canceling, or not renewing your policy. This explanation must include the precise incident, circumstance, or risk factor that violated the company’s underwriting guidelines; and the insurer’s sources of information about the incident, circumstances, or risk factor. These cannot include a phone call from your ex-mother-in-law or that cow you hit.

An insurance company may not cancel an auto policy that has been in effect for more than 60 days unless you fail to pay your premium, you file a fraudulent claim, or your driver’s license or motor vehicle tags are suspended or revoked. This also applies to other drivers who live with you or customarily use your car, except for that cow that keeps using your phone.

However, during the first 60 days, the company may cancel a policy for any lawful reason, including a ticket or an accident. If the company cancels your policy because of an accident (what happened in your britches when you finally noticed the Mack is not considered), it still must pay for covered damages resulting from the accident. The company must give you written notice at least 10 days before canceling your policy.

If either you or the company cancels your policy, the company must refund any premiums paid in advance that did not buy coverage. This amount is called the "unearned premium." For example, if you paid a six-month premium of $600, and you cancel your policy after one month, the company owes you $500 in unearned premium, and that’s plenty to go buy yourself a brand new pair of britches.