Auto Insurance Basics

Auto Insurance Requirements in Texas

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The State of Texas requires that all drivers pay for any damages or medical injuries they cause in an accident here. The most common way to show that financial responsibility in Texas is with auto insurance, where drivers pay a small premium in exchange for a greater amount of liability protection. There are other alternatives where Texans can get a certificate of insurance to fulfill the legal requirement, including depositing cash with the state, or creating a surety bond.

Texans have to present a valid driver’s license and some proof of their financial responsibility when approached by a police officer or when in an accident. Even though TexasSure was implemented to make insurance, VINs, and license plates accessible on the go, it's still best to keep your proof on hand. All auto insurance providers licensed in Texas are obligated to mail insured drivers their insurance card, and include a copy of the Consumer Bill of Rights for auto insurance (see an example here).

Texas Required Auto Insurance CoverageRequired Min. Limits
Bodily Injury (BI) $30,000 per person/$60,000 per accident
Property Damage (PD) $25,000 per accident

Texas Car Insurance Requirements & Minimums

The most recommended and common way to satisfy the legal responsibility in Texas is by purchasing an auto insurance policy. While a policy is made up of multiple coverages, the Texas Department of Insurance requires that drivers' coverage include at least bodily injury and property damage protection. Through the policy, your insurance provider in Texas bears the financial burden of paying for the damages you cause - up to the coverage limits per injured person or per accident, when the policyholder is at-fault for the accident. Note that your insurance company's policy pays only the costs of OTHER party, and neither your own injuries nor property damage repair costs.

Minimum Motor Vehicle Liability Insurance Coverage in Texas:

  • Bodily Injury: at least coverage of up to $30,000 for personal injury costs per person in the other vehicle, and up to $60,000 total per at-fault accident
  • Property Damage: at least coverage of up to $25,000 worth of property damage payout per at-fault accident

In addition to the minimum liability insurance, Texas requires all insurance companies to offer and include optional Personal Injury Protection and Uninsured / Underinsured Motorist (UM/UIM) in your policy. These will pay for your own medical and subsequent costs in an accident you caused, or when you are hit by a driver who is behind the wheel without insurance or with insufficient insurance. Policyholders have the right to reject these extra coverages in writing:

  • Personal Injury Protection: available for up to $2,500 medical costs for personal injuries sustained by the policyholder in each accident
  • UM/UIM: available with an automatic $250 deductible; pays the medical and property damage costs for the policyholder when the at-fault party doesn't have auto insurance (UM) or doesn't have enough insurance to pay for your damages (UIM). UIM will pay for any damages that the underinsured motorist can't pay for, up to the policy limits you select. These two types are typically bundled together. The most recent TexasSure data indicates that slightly more than 20% of vehicles in Texas can't be matched to an insurance policy. When 1 in every 5 vehicles on the road is uninsured, the risk of getting into an accident with an uninsured driver gets a little higher - UM and UIM might be a worthwhile protection.

Other Types of Financial Responsibility and Minimums

Other than an auto insurance policy, there are four less common alternatives to prove your responsibility and ability to pay for accidents you cause. Each of these requires a Financial Responsibility Certification from the Department of Public Safety (DPS) as proof.

Deposit of Cash/Security with the Comptroller: the most common alternative among the four, drivers have to set aside $55,000 in either cash or a personal certificate of deposit (CD) with the Texas Comptroller. Contact the DPS and request an application, then send the cash or security along with all the paperwork to the Comptroller. Once the Comptroller’s office verifies the deposit, the DPS will issue a certificate to you as your proof. If you cause an accident, you and the other driver have to settle the payment amount, and it gets deducted from the $55,000 that was set aside. Otherwise, you take it to court yourselves.

Surety Bond: this method requires that you find two other people to insure you, through a surety bond, for at least the minimum amounts that Texas requires in a conventional auto insurance policy. The bond serves as a guarantee that these two other individuals will pay in your place when you can't reimburse someone else for the injuries or damage that you're at fault for in a car accident. As a security for the surety bond, the other two individuals have to list their real properties in Texas, have the county Tax Assessor-Collector certify that there are no tax liens, and get it approved by a judge with the DPS. When the DPS receives all the necessary statements and documents for the surety bond, it will issue you the certificate. 

Deposit of Cash/Cashier's Check with Your County Judge: this is the least accessible option because very few county judges accept this kind of deposit, according a customer service analyst at the DPS. You must find the judget for the county where your car is registered, and ask whether he is willing to take a $55,000 worth of deposit in either cash or cashier’s check. If he accepts it, then he will notify the DPS, which will in turn issue you the certificate.

Certificate of Self-Insurance: the law allows for individuals to self-insure, but in practice, this is only allowed for companies. When a company owns and has 26 or more cars registered under its name, it may apply to insure all of its vehicles, as opposed to purchasing a commercial auto policy. The most important requirement is to provide an audited financial statement that shows the company has more than $255,000 of monthly net assets. Other necessary documents include past claims history and claims procedures as a self-insurer (if available), as well as an agreement that it will pay up to $85,000 per accident. Certificates must be renewed every 3 years to remain valid.

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