Texas law requires people who drive in Texas to pay for the accidents they cause.
Most drivers do this by buying auto liability insurance. Liability insurance pays to repair or replace the other driver’s car and pays other people’s medical expenses when you’re at fault in an accident.
The current minimum liability limits are $30,000 for each injured person, up to a total of $60,000 per accident, and $25,000 for property damage per accident. This basic coverage is called 30/60/25 coverage.
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Many insurance companies use the Texas Personal Automobile Policy, a standardized policy form that offers eight types of coverages. Companies may sell other policies that the Texas Department of Insurance has approved. Learn how to read coverages.
1. Liability Coverage
What it pays: The following expenses, up to your policy’s dollar limits, for the people in the other car involved in an accident that you or someone covered by your policy caused:
medical and funeral costs, lost wages, and compensation for pain and suffering;
car repair or replacement costs; and
car rental while the other driver’s car is being repaired.
Liability insurance also pays your defense costs, including attorney fees if someone sues you because of the accident. If you are arrested following an accident, liability insurance will pay up to $250 for bail.
2. Collision (damage to your car) Coverage
If you still owe money on your car, your lender will require you to have collision coverage.
What it pays: The cost of repairing or replacing your car after an accident. You’ll get the amount of your car’s actual cash value, the amount to repair or replace the car, or the amount shown on the declaration page, whichever is less. Actual cash value is the current cost to replace your car, minus depreciation.
3. Comprehensive (other than collision) Coverage
If you still owe money on your car, your lender will require you to have comprehensive coverage.
What it pays: The cost of replacing or repairing your car if it’s stolen or damaged by fire, vandalism, hail, falling objects, or an event other than a collision.
4. Medical Payments Coverage
What it pays: Medical and funeral bills resulting from an accident.
Who it covers: You, your family members, passengers in your car, and other injured people, including bicyclists and pedestrians, regardless of who caused the accident.
5. Personal Injury Protection (PIP) Coverage
What it pays: Similar to medical payments coverage, plus 80 percent of lost income and the cost of hiring a caregiver for an injured person.
Who it covers: You, your family members, and passengers in your car, and other injured people, regardless of who caused the accident.
Your insurance company will automatically give you PIP coverage, but you may reject it in writing if you don’t want it. The company must offer you $2,500 in PIP, but you can buy more.
6. Uninsured/Underinsured Motorist (UM/UIM) Coverage
What it pays: Your expenses from an accident caused by an uninsured motorist, a motorist who did not have enough insurance, or a hit-and-run driver. Also pays for personal property that was damaged in your car.
7. Towing and Labor Coverage
What it pays: Towing charges when your car can’t be driven. Also pays labor charges, such as changing a flat tire or jump-starting your battery.
8. Rental Reimbursement Coverage
What it pays: A set daily amount for a rental car if your car is stolen or is being repaired. Your company only pays for rental reimbursement if your car was damaged by something such as fire or theft that your policy covers.