Find the Cheapest Auto Insurance Quotes in Your Area
According to the Texas Safety Responsibility Act (also known as the Financial Responsibility Law), all drivers in Texas need to be financially responsible for operating their motor vehicles, which means that they must possess the state minimum coverage of auto insurance. High risk drivers are occasionally not eligible to purchase insurance in the standard and voluntary market. Texas drivers who can certify that they have been rejected for insurance by two companies within 60 days are eligible for coverage through TAIPA.
What is the Texas Automobile Insurance Plan Association (TAIPA)?
The Texas Automobile Insurance Plan Association was established in 1952 to provide high risk drivers, who have been deemed ineligible by companies in the voluntary auto insurance market, with insurance so that they are able to meet the state requirement.
Once a motorist’s application has been accepted by the TAIPA, they are placed into a residual pool consisting of insurance companies licensed to write automobile insurance in Texas that are members of the Association. Each member company of the Association has to accept a certain amount of drivers each year from the residual pool in order to meet an annual quota. A member company who has 10% of the Texas auto insurance market share will be allocated 10% of the high risk drivers from the residual pool. For example, State Farm Mutual Automobile Insurance had 19.2% of the Texas auto insurance market share in 2013, which means that 19.2% of the high risk drivers in the residual pool should be assigned to State Farm. A motorist in the pool has a good chance of being assigned to a large, national insurance company. If a member company fails to report data to TAIPA, the consequence is a larger number of drivers assigned to them from the residual pool.
Regardless of which carrier a motorist is assigned to by TAIPA, the coverage that will be offered is universally the same. TAIPA offers very basic coverage, but it costs much more than identical coverage policies in the voluntary market. Thus the number of drivers in TAIPA’s residual pool has decreased over time, as motorists have been able to find cheaper auto insurance with TX companies that specialize in insuring high risk drivers. In 2014, only 3,628 motorists applied for coverage with TAIPA, which suggests that most high risk drivers were able to find reasonable policies within the voluntary market.
TAIPA’s Policy Coverage and Costs
TAIPA applicants must certify that they have been rejected for coverage by two auto insurers in the last sixty days in order to be eligible for coverage. Motorists in the military are eligible for coverage if they are stationed in Texas, or if they are a Texas resident stationed in another state. Once assigned to a designated insurer, the driver is entitled to coverage for three consecutive years. During those three years, the insured is entitled to the same rates from the insurer. If a TAIPA motorist is unable to find coverage in the voluntary market after the three-year period is over, he or she can re-apply for insurance with TAIPA and be re-assigned to a new insurer.
Coverage and Limits
TAIPA only offers the minimal limits of coverage required by law. The coverage is bare bones but expensive, so motorists are not getting much bang for their buck. The Texas Motor Vehicle Safety Responsibility Act sets the minimum limits of coverage at $30,000 for bodily injury liability per person in an accident, $60,000 total bodily injury liability per accident, and $25,000 property damage liability. Designated insurers are required to write TAIPA policies for these minimum limits. Higher liability limits and optional comprehensive and collision coverage are not available through TAIPA. Insured motorists do have the option of adding personal injury protection at a limit of $2,500 and uninsured/underinsured motorists coverage at minimum limits of liability. Medical payments coverage is not included in personal injury protection.
Most insurance companies penalize insured customers for at-fault accidents and traffic tickets with raised premiums, but TAIPA also penalizes insured customers for non-fault accidents in accordance with Rule 9. For specific guidelines about surcharges for accidents and traffic tickets, consult TAIPA’s FAQs: http://taipa.org/faq/rule-9-faqs/.
Rates and Premiums
To get a quote for TAIPA’s rates, it’s best to directly contact a producer in your area. Only annual policies are offered through TAIPA, so the policy must be renewed after each year. TAIPA has three different premium payment options:
- Full annual premium payment – pay the full annual premium upon assignment to a designated insurer through TAIPA but does not have to put down a deposit.
- Advance Premium Payment – put down a 25% down payment and pay their balance within 30 days of the date of the billing notice from their designated insurer.
- 8 Payment Installation Option – put down a 20% down payment of their total annual payment and then pay the remaining balance in 8 installments to their designated insurer.
How to Get Insurance through TAIPA
To apply for insurance through TAIPA, call TAIPA’s toll free number (866) 321-9154 to be put in touch with a local producer.
Applications can also be submitted online, mailed to TAIPA, or hand-delivered. Instructions are located on the TAIPA website.
A sample application form for private passenger autos is also available on the website.
For questions about TAIPA, call the toll free number above or consult the online FAQ section of the website.