If you’ve recently moved to Texas, just got your driver’s license, or purchased a new vehicle, congratulations!
These are things to celebrate since they’re big milestones in life. But before you hit the road here, there are a few rules you have to follow first.
It’s important to understand the state requirements for car insurance. You want to protect yourself in case you get into an accident.
It helps to know what’s legally required and how you can adjust to that to fit your situation and your needs.
What’s the state minimum for car insurance?
When it comes to car insurance, every state has its own laws and legal minimum requirements. It’s mandatory in most and not in others.
Technically, you’re only legally required to carry the state minimum for car insurance.
Drivers in Texas are legally required to carry liability insurance.
This type of coverage pays for injury and lost wages that you might cause to another driver or their passengers. This also covers any damage to the other driver’s car if you’re deemed at fault in an accident.
Note: liability insurance doesn’t cover your injuries or damage to your vehicle.
In Texas, the minimum requirements are 30/60/25. What that means is:
- Bodily injury $30,000 per person. This is the maximum dollar amount that covers one person that you injured in a car accident
- Bodily Injury $60,000 per accident. This is the maximum dollar amount that pays for any injuries you cause in an accident if more than one person is hurt.
- Property damage $25,000 per accident. This is the maximum dollar amount that pays for the damage you cause in an accident.
Am I protected with the state minimum car insurance?
It’s appealing to go with the bare minimum when it comes to car insurance. You have just enough to be able to legally drive. And it’s easier on your wallet when it comes to paying your premiums.
Sure, you’ll save some cash over the years, but that’s only if you never get into an accident. And how can you predict that you’ll always be that lucky?
Going with a liability-only policy with coverage numbers that low will most likely not be enough to cover all the costs in an accident. Remember, your car and your injuries are not covered with liability insurance.
Wait, but how much car insurance do I really need?
It’s tricky to figure out exactly how much car insurance you need. Of course you want enough insurance to protect you and your assets. But you don’t want to break the bank with high monthly premiums.
In Texas, the average car insurance rate is already pretty high compared to the rest of the country. Drivers pay around $1,008.91 per year for car insurance.
But don’t get too hung up on these averages. Insurance rates are dependent on so many factors. And average car insurance rates are usually based on a quote for a driver who might have very little in common with your own coverage needs.
When it comes to figuring out how much liability insurance to have, add up the value of your assets, investments, and income. And then purchase a liability policy proportional to that amount. It can cost around $575.17 for liability, but this number will change based on the amount of liability you choose to purchase.
In any case, you should always purchase more than the state minimum liability insurance.
And it’s best to consider additional types of insurance as well.
What are some other types of coverages I can consider?
Besides liability insurance, Texas doesn’t require drivers to have kinds of car insurance.
But here are some other options to consider to make sure you’re better protected in an accident.
Uninsured and underinsured coverage
Uninsured and underinsured coverage has two components to it: bodily injury and property damage.
This insurance protects you if you’re hurt in an accident caused by someone who is driving without insurance or who doesn’t have enough coverage to take care of the damages.
For this coverage, you have to pay a deductible. A deductible is the amount of a claim that you must pay yourself before your insurance policy kicks in.
Medical payments vs PIP
Texas is the only state that offers medical payments (MedPay) and personal injury protection (PIP).
Both MedPay and PIP pay for medical services for any injuries you get that are caused by a car accident.
PIP covers your immediate relatives and people under the same policy as you and takes care of any medical, surgical, rehabilitation, and psychiatric care. It will also provide compensation for lost work wages.
On the other hand, MedPay will only cover the medical bills of the insured and only covers direct medical and surgical care after an accident.
It’s mandatory for insurance companies in Texas to offer PIP coverage with any auto policy. But it’s not mandatory for you to have PIP in order to legally drive in Texas. You must sign a waiver declining the coverage if you don’t want PIP.
If you already have health insurance and disability coverage, you might think it’s redundant to have PIP. But it’s good to have because if you’ve exhausted the limits of PIP, you can then rely on your health insurance to pay for the rest of the costs.
But if you don’t have health insurance, you should get PIP or MedPay to help with any medical costs in the event of an accident.
Collision and comprehensive insurance
Collision and comprehensive insurance protects against damage to your car. Comprehensive insurance protects against damage not from a car accident. That means things like hail, theft, and vandalism.
Collision insurance covers damage against all types of collisions. You’re covered if you hit another car, if you hit a tree, or you damage your car driving over a pothole.
You will also have to pay a deductible before insurance covers the rest of your claim.
On average, drivers pay $403.29 for collision and $215.84 for comprehensive.
I shouldn’t go with the state minimum to save money. So are there other ways to save?
There are plenty of things you can do in the short and long term to get those pricey premiums down.
In the short term think about:
- Increasing your deductible
- Switching from monthly payments to annually or every six months
- Signing up for paperless billing
- Setting up a home and auto insurance bundle with one insurance company
- Adding another car to your policy
And in the long term you can:
- Maintain a clean driving record and a claims-free history
- Pay attention to your credit score
- Make sure you have continuous coverage. A lapse in coverage will result in a premium spike.
- Drive less: If you carpool or use other transportation to commute to work, insurance companies will see you as less of a risk. The less time you’re on the road, the lower chance you’ll be in an accident and have to file a claim!
What if my car insurance is still expensive?
If you still think your car insurance is expensive, consider shopping around.
You never know what savings you’re missing out on if you don’t check out competitors’ rates. Get quotes from a few insurance companies and compare prices.
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