In this article, we'll take a look at some important points in Texas's auto insurance laws and requirements. We'll examine Texas's status as a "fault" insurance state, and we'll discuss auto insurance requirements for those who want to drive in the state, along with the possible penalties for those who don't purchase minimum auto insurance coverage.
Texas uses a "fault" system when it comes to auto insurance. In the words of the Texas Department of Insurance, a "fault" system is one that requires drivers to "pay for the accidents they cause." After an accident occurs, a driver, passenger, or pedestrian who suffered injury in the crash may decide to file a claim with his or her own auto insurance first, in what's known as a "first-party" claim. The injured person may also decide to seek compensation from the other driver's insurer, by filing what's known as a "third-party" claim. (The "second party" is always the insurance company.) Finally, an injured person may also choose to go to court and file a lawsuit in order to prove fault and seek money damages for injuries, property damage, pain and suffering, and other losses related to the accident.
(By contrast, "no-fault" states usually require the insurer to pay, regardless of who caused the accident. An injured person must meet certain threshold requirements in order to step outside the no-fault system. For more information on how no-fault works in state's like Texas's almost-neighbor Kansas, see No-Fault Car Insurance and State Laws.)
Texas requires drivers to carry auto insurance in order to meet the state's financial responsibility requirement. At a minimum, Texas drivers must have the following coverage:
This basic coverage -- known as "30/60/25" coverage for short -- pays medical bills, property damage bills, and other costs if you are found to be at fault for an accident in which another person is injured or their property is damaged. You can (and probably should) carry higher insurance limits to help protect you in case a serious accident results in very high bills. If you're found to be at fault, you are responsible for paying any bills above and beyond the limits in your insurance policy, so higher insurance limits can help protect your personal assets in the event of a crash.
You'll need to carry your insurance card or proof of insurance in your vehicle with you, in case you are asked to present it to a law enforcement officer during a traffic stop. Failing to carry insurance or to provide proof of insurance when asked can result in fines and other penalties, especially if you're in an accident.
Texas does not require drivers to buy uninsured/underinsured motorist coverage, but it does require insurance companies to offer this kind of coverage, which can provide additional protection in an accident. In Texas, all uninsured/underinsured motorist coverage is subject to a $250 deductible, which you must pay before the insurance company will pick up the remaining bills. To learn more about how uninsured/underinsured coverage works, see our articles Uninsured Motorist Coverage and Underinsured Motorist Coverage.
The Texas Department of Insurance website offers more information on auto insurance in Texas, including advice on purchasing insurance coverage.