The Texan's guide to auto insurance in the Lone Star State

February 25, 2020
Texas is a big place and a lot can happen along the many miles of highway sprawling across the state. That's why it's important to protect yourself with auto insurance before you hit the road. But insurance can be complicated, and car insurance is no exception. Whether you're moving to the Lone Star State or just need to get from point A to B, we'll break it down in our guide to auto insurance in Texas. 

A young Texas family in their car on the side of the road.

Is auto insurance required in Texas?


Texas is considered an "at fault" state when it comes to auto insurance. This simply means that, by law, you are required to have insurance that covers any damage you may cause. 

At minimum, drivers in Texas are required to have the following coverage amounts: 
  • $30,000 for bodily injury liability coverage per person injured in an accident you are responsible for
  • $60,000 for bodily injury liability per accident (when two or more people are injured in an accident you are responsible for)
  • $25,000 for property damage liability per accident
Remember, this is only the minimum liability required in Texas. It pays for medical expenses and other costs accrued by anyone injured or otherwise affected by an accident for which you are at fault. However, should the cost exceed the coverage amount of your policy, you are then responsible for the remainder. That's why it might be a good idea to increase your coverage in the event that an accident is more than a simple fender bender or involves multiple vehicles. 

It is also important to note that the minimum coverage does not pay to repair or replace your own property or cover your own medical bills. That's why auto insurance companies in Texas include the following coverages by default (if you elect not to have these coverages, you must inform the company that you reject it):
  • Personal injury protection (PIP)
  • Uninsured/underinsured motorist
After purchasing car insurance, you'll receive a proof of insurance card. In Texas, you'll need to provide proof of auto insurance if:
  • You need to get your car inspected
  • You need to register your vehicle
  • You are pulled over by a law enforcement officer

What types of auto insurance policies are available in Texas?


Above we talked about the bare essentials of auto insurance in Texas. Now, let's take a look at all of the most common types of coverages typically offered

Liability - This is the most basic type of auto insurance and covers property damaged by an accident you caused. It also pays for the medical expenses of the other driver and their passengers. 

Collision - Because basic liability only covers the other driver's vehicle, collision can help you repair or replace yours in the event of an accident you are at fault for. In addition, it can also help fix your car in the event you crash into a stationary object, such as a lamp post. If you have a lease or remaining payments on an auto loan, the lender may require you to have one of these policies.

Other than collision (OTC) (sometimes called comprehensive) - This policy covers damages to your vehicle that come from incidents other than collisions (as the name would suggest). This usually includes things like fires, floods, hail, theft, and vandalism. If you have a lease or remaining payments on an auto loan, the lender may require you to have one of these policies.

Personal injury protection (PIP) or Medical payments - Both of these provide coverage for bodily injuries resulting from an auto accident for you and your passengers. This would include reasonable medical expenses such as doctor, hospital, surgical, nursing and funeral expenses. However, PIP can pay for things such as lost wages and other such losses that result from an accident. 

Uninsured/underinsured motorist protection - This policy provides coverage if you're hit by a driver that doesn't have insurance, or whose insurance can't adequately cover the cost of the damages cause.

Roadside assistance/towing and labor - If your vehicle is too damaged or otherwise incapable of driving, these policy add-ons can pay to have it towed. Many insurance companies also offer additional roadside assistance services, such as jump-starting a battery or replacing a tire. 

Rental reimbursement - This policy can provide help if you need a rental car while your car is being repaired after an accident or if it has been stolen.

What does an auto insurance policy typically cover in Texas?


In Texas, most basic policies cover the following:
  • Car repair of other vehicle if responsible
  • Medical bills, lost wages, funeral costs for other drivers or passengers injured in an Accident you are responsible for
  • Damage to property (like buildings, landscaping, signs)
  • Out of state accidents
With collision and/or OTC/comprehensive coverage, most policies cover:

What DOESN'T an auto insurance policy typically cover in Texas?


In Texas, most insurance policies will NOT cover the following:
  • Intentional damage to vehicle
  • Driving a company car
  • Driving for rideshare service, like Uber or Lyft
  • Driving for a delivery service
  • Driving your personal car for business
  • *GPS/Radios, stereo systems and most aftermarket installations.
*Some insurers offer specialized protection/additional coverage for these items. Comprehensive will typically replace stock/factory features, just not aftermarket.

What if I'm in a renting or borrowing a car?


Most policies offer coverage while driving a rental car, but only if it is for personal use. in other words, if you're driving it for business, your personal auto insurance policy won't likely cover you - the business' policy would likely take over at that point. Make sure to consult your company about its auto insurance policy prior to traveling.

If you borrow a car and have an accident, typically, the owner's insurance pays for the damages. However, if they are lacking coverage, your insurance may be required to pay.

How are auto insurance rates calculated in Texas?


As with homeowners insurance and life insurance, insurance companies have an internal underwriting process they use to determine your auto insurance premium. While this process can vary slightly from company to company, there are several factors that they have in common. 

Type of vehicle (make, year, and model) - As you can imagine, the type of car you're trying to get an insurance policy for has a big impact on how much your premium will wind up being - especially for collision and OTC/comprehensive coverage. In general, the more expensive a car is to repair, the higher the premium will be. 

However, the cost of the car is only one factor and it is not always true that a cheaper car will have cheap insurance rates. While vehicles considered to be "luxury" or "sports cars" typically require higher premiums, insurance companies also consider the horsepower of a car, cost of replacement parts, the likelihood of theft, and vehicle safety ratings.

For example, a car with all of the latest safety features might be more expensive to buy but less expensive to insure. On the other hand, an older vehicle may be cheaper to purchase, but might have a higher risk of having an accident because of its outdated safety technology. 

Driving record and claims history - This is a big one. Insurance companies pay close attention to your driving records when determining rates. This includes looking at tickets for traffic violations as well as your accident and claims history. If an applicant has too many accidents, claims, or tickets, an insurance company may even refuse to insure them. 

Where you live and drive - In general, insurance companies have higher rates for cars that are kept and driven in cities (as opposed to a more rural area). Cities simply have more people and more cars, which translates to a higher chance of a collision, and even higher rates of theft.

But cities can be big places with diverse driving conditions. That's why many insurance companies may have different rates for different zip codes within a particular city. 

Age - Your age can also be a significant consideration when calculating rates. In Texas, teens can get a learner's permit at 15 and a provisional license at 16. Unsurprisingly, young and inexperienced drivers have much higher rates. 

On average, rates are the highest for men under 25 and women under 21. After that, rates more or less level out, but may increase after 70. 

Credit score - Most insurance companies will look at your credit score when determining your auto insurance premium.

Are there discounts available for my auto insurance policy in Texas?


Most insurance companies offer at least a few different ways you can earn a discount on your auto insurance policy. However, the type and amount of the discount varies from company to company, so it's important to ask your agent for specifics. 

Companion discounts (bundle with other services) - Many insurance companies offer discounted rates when you hold other policies with them, such as a personal liability policy or a homeowner insurance policy. 

Defensive driving or driver safety courses - State-approved driver safety courses, also known as defensive driving classes, are typically used as a way to dismiss a traffic ticket. However, you can also elect to complete one of these classes to get a discount on your insurance. There are a number of venues that host these sessions, but you can also find online classes as well. 

Good driving record - Simply put, if you have a clean driving record, insurance companies are more willing to offer discounts!

Anti-theft - A stolen car is bad news for both you and your insurance company. That's why some providers encourage you to get an anti-theft system by offering a discount for having one. Anti-theft systems come in all shapes and sizes, so make sure to ask your agent if yours qualifies for a discount.
 

Anti-lock braking system (ABS) - An ABS is a safety feature designed to prevent your wheels from locking up during braking and prevent skidding. While most newer vehicles come standard with ABS, older ones may not. If you're not sure whether your car has ABS or not, you can usually find that information in the owner's manual. 

Passive restraints or airbags - A passive restraint refers to any device designed to keep you from flying out of the vehicle during a crash or sudden stop. Automatic seatbelts and airbags are the most common examples of factory installed restraints. At the very least, you probably already have seatbelts in your vehicle because it is the law in Texas.

Academic Achievement - Good grades can pay off! While it can be expensive to purchase auto insurance for drivers under the age of 25, many companies will provide discounts for students that maintain a certain grade point average. 

Do I need to change my auto insurance policy if I move?


Whether you're moving to or from Texas, or if you're moving somewhere else in the state, you need to notify your auto insurance agent or otherwise alter your coverage.

Different states, different requirements


Auto insurance is regulated at the state level, which means different states require different minimum coverage amounts. For example, California only requires bodily injury coverage of $15,000 per person, $30,000 per accident, and $5,000 per accident for property damage. This is considerably less than what Texas requires and you'll need to alter your coverage accordingly. 

As mentioned before, Texas is an at-fault state when it comes to auto insurance. If you move to a state that is considered no-fault, you will be required by law to purchase personal injury protection (PIP). Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah are no-fault states.

Pricing difference based on location


Even if you're staying within the Lone Star State, you need to speak with your insurance agent when making a move. As mentioned previously, your location is one of the many factors that goes into determining your rate and it could go up or down depending on where you're going. For example, if you're moving from the city to the country (or vice versa), you will very likely have a change in rates. 

What is the best auto insurance in Texas?


A car crash is never an easy experience to go through. When you've been involved in an automotive accident, you shouldn't have to worry about whether or not your insurance company is going to cover it. That's why it's important to find an insurance company you can trust

To find out more about auto insurance in Texas, give one of Germania's trusted agents a call and learn how you can give yourself peace of mind wherever your travels take you.

A Texas family in their car, protected by auto insurance

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Read more: Auto claims can be a hassle - but they don't have to be. Learn how Germania Insurance is leveraging mobile technology to make the claims process easier than ever!

by Geoff Ullrich

About the Author

Geoff Ullrich is a writer and Content Marketing Specialist at Germania Insurance.