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As a personal injury attorney, I’ve seen first-hand how having the right amount of car insurance makes all the difference if you’re injured in a car accident.
We all get bombarded with gimmicky commercials for car insurance with large birds, reptiles, people in aprons, et cetera. They’re funny, but tell you nothing about what you truly need inside your policy.
I have two hopes here. One is that you’re never in an accident.
The other is that you read this and get proper insurance coverage in case you’re ever in one.
Read on to see top things I wish everyone knew about car insurance in Texas.
Let’s start with what is required by law:
In the state of Texas, you are required to carry liability insurance for bodily injury with minimum limits of $30,000 per person and $60,000 per accident, and liability insurance for property damage with minimum limits of $25,000.
What does that mean?
Basically, it means that if you cause an accident and damage someone’s property and/or injure someone, your insurance will pay for those injuries or damages up to the amount of your policy limits. Liability insurance is there to pay for damages that you cause to someone else. It does nothing for you if you are injured.
Why would anyone buy more than the minimum?
Why would anyone ever buy more than the minimum?
There are a couple of reasons:
- If you own any property in excess of your homestead and up to $30,000 in personal property (this includes everything you own as well as the value of one vehicle per person) that excess property could conceivably be taken to satisfy a judgment if you were to ever cause harm to someone greater than your insurance limits. Additional liability coverage past the minimum limits is relatively cheap since the risk that you’re going to cause in excess of $30,000 in damage is relatively low. Therefore, it can make sense to purchase more than the required amount of liability insurance if you have any concerns about protecting your property from exposure to liability.
- In Texas, the law is such that you cannot purchase more Uninsured / Under-Insured (UM / UIM) coverage than you have in liability coverage. So, if you want to protect yourself by carrying higher UM / UIM limits, you’ll have to increase your liability limits accordingly. We’ll talk about UM / UIM coverages below.
What are Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverages and why do I need them?
- Uninsured Motorist coverage covers you in the event that you’re injured or your property is damaged due to the negligence of an uninsured driver. But isn’t it the law that people have to have insurance? Yes, but that doesn’t stop lots of people from driving every day without insurance.
- Under-Insured Motorist (UIM) coverage is there to protect you in the event that you’re injured or your property is damaged and the responsible party doesn’t have enough insurance to fully compensate you for your injuries or damages. With the minimum limits of $30,000 per person and $25,000 for property damage, it is a good possibility that the person who caused the wreck may not have enough insurance to fully cover all of the damages.
I have collision coverage, why do I need UM / UIM coverage?
While it is true that collision coverage would pay to repair or replace your vehicle if it was damaged by an uninsured or under insured driver, that’s all that it would do. It will not help you with injuries at all, and it only covers your vehicle whereas UM / UIM coverage covers everything (up to the policy limits) that the negligent person damaged. For example, your brand new laptop is in your car when you get into a wreck and is ruined. Collision coverage isn’t going to help with that. Another thing that collision coverage doesn’t help with is diminution in value or diminished value. Meaning that if your vehicle is damaged and then repaired, the value might decrease as a result. If the person who caused the wreck has sufficient insurance, you can pursue a claim to recover those damages. If they don’t, then you could pursue a claim against your own UM / UIM policy to recover those damages.
What about Personal Injury Protection (PIP) vs Med Pay?
My recommendation is that you purchase the most Personal Injury Protection (PIP) coverage that you can. PIP is no fault coverage which means that it pays regardless of who was at fault for the wreck. If you were in a covered vehicle, and you’re injured, it pays for medical expenses and also missed time from work. It pays quickly whereas it can take months to years to fully resolve a case with the other driver’s insurance and / or with your own UM / UIM insurance. Also due to the Collateral Source Rule in Texas, you can recover from your PIP insurance and then recover again from the other driver’s insurance making sort of a double recovery that is perfectly legitimate since it’s due to coverage that you paid for.
I don’t like Med Pay. While it is better than nothing, it has some tricky requirements and the insurance company usually has the right of subrogation which means they get to be paid back if you make a recovery from the other driver’s insurance.
Definitely stick with PIP.
If I make a claim on my policy, won't my rates go up?
Maybe. If they do, then you can easily switch to one of the myriad insurance companies who are fighting for your business every day.
After all, what is the point of having coverage and then not using it when you need it out of fear that your rates will go up?
What about rental coverage? Won’t the other person’s insurance pay for a rental car for me if my car is damaged?
Again the answer is maybe.
Assuming that the other person is at fault for the wreck, most of the major insurance companies will set you up with a rental vehicle for a “reasonable” time while your vehicle is in for repairs.
What is “reasonable”? Usually, the insurance companies determine that by the number of days that the repair order says it will take to fix your car. If the repair order says it will take 3 days to fix your car, but the shop had to send the bumper back because the wrong one came in and it takes a couple extra days, good luck on getting the other person’s insurance company to pay for those extra days.
If you’re unlucky enough to get hit by someone with really bad insurance, you’ll likely have to pay upfront for a rental and then hope to be reimbursed after the fact.
So, rental coverage is definitely a good idea unless you’re prepared to pay for a rental out of pocket.
What does collision coverage cover?
Collision coverage pays to repair or replace your vehicle if it’s damaged in a collision.
What does comprehensive coverage cover?
Comprehensive coverage pays to repair or replace your vehicle if it is stolen or damaged by other than a collision (hail, theft, tree limb, etc.) You are probably required to have this if your vehicle is financed. If your vehicle is not financed, then it’s up to you, but you probably should have this coverage unless you’re financially willing and able to repair or replace your vehicle if something should happen to it.
What if my vehicle is totaled? Will I get enough to purchase another vehicle?
Maybe, maybe not. The insurance company whether it’s your own collision / comprehensive or UM/UIM coverage or the other driver’s liability coverage only owes for the Actual Cash Value (ACV) of the vehicle at the time of the loss. So, how much you owe, or how much you think your car is worth is not really relevant to how much the insurance company is going to pay for it. Sometimes insurance companies do under value vehicles and we have been successful in getting those values increased on occasion, but in most cases the value that the insurance company calculates for your vehicle is all that they’re going to pay.
If you owe more than your vehicle is worth, you should definitely carry GAP coverage. GAP coverage is there to pay the difference between what you owe and what the insurance company is obligated to pay for your vehicle.
MOBILE SECTION
What you need to know about car insurance in Texas.
As a personal injury attorney, I’ve seen first-hand how having the right amount of car insurance makes all the difference if you’re injured in a car accident.
We all get bombarded with gimmicky commercials for car insurance with large birds, reptiles, people in aprons, et cetera. They’re funny, but tell you nothing about what you truly need from in your policy.
I have two hopes here. One is that you’re never in an accident.
The other is that you read this and get proper insurance coverage in case you’re ever in one.
Read on to see top things I wish everyone knew about car insurance in Texas.
Let’s start with what is required by law:
In the state of Texas, you are required to carry liability insurance for bodily injury with minimum limits of $30,000 per person and $60,000 per accident, and liability insurance for property damage with minimum limits of $25,000.
What does that mean?
Basically, it means that if you cause an accident and damage someone’s property and/or injure someone, your insurance will pay for those injuries or damages up to the amount of your policy limits. Liability insurance is there to pay for damages that you cause to someone else. It does nothing for you if you are injured.
Why would anyone buy more than the minimum?
Why would anyone ever buy more than the minimum?
There are a couple of reasons:
- If you own any property in excess of your homestead and up to $30,000 in personal property (this includes everything you own as well as the value of one vehicle per person) that excess property could conceivably be taken to satisfy a judgment if you were to ever cause harm to someone greater than your insurance limits. Additional liability coverage past the minimum limits is relatively cheap since the risk that you’re going to cause in excess of $30,000 in damage is relatively low. Therefore, it can make sense to purchase more than the required amount of liability insurance if you have any concerns about protecting your property from exposure to liability.
- In Texas, the law is such that you cannot purchase more Uninsured / Under-Insured (UM / UIM) coverage than you have in liability coverage. So, if you want to protect yourself by carrying higher UM / UIM limits, you’ll have to increase your liability limits accordingly. We’ll talk about UM / UIM coverages below.
What are Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverages and why do I need them?
- Uninsured Motorist coverage covers you in the event that you’re injured or your property is damaged due to the negligence of an uninsured driver. But isn’t it the law that people have to have insurance? Yes, but that doesn’t stop lots of people from driving every day without insurance.
- Under-Insured Motorist (UIM) coverage is there to protect you in the event that you’re injured or your property is damaged and the responsible party doesn’t have enough insurance to fully compensate you for your injuries or damages. With the minimum limits of $30,000 per person and $25,000 for property damage, it is a good possibility that the person who caused the wreck may not have enough insurance to fully cover all of the damages.
I have collision coverage, why do I need UM / UIM coverage?
While it is true that collision coverage would pay to repair or replace your vehicle if it was damaged by an uninsured or under insured driver, that’s all that it would do. It will not help you with injuries at all, and it only covers your vehicle whereas UM / UIM coverage covers everything (up to the policy limits) that the negligent person damaged. For example, your brand new laptop is in your car when you get into a wreck and is ruined. Collision coverage isn’t going to help with that. Another thing that collision coverage doesn’t help with is diminution in value or diminished value. Meaning that if your vehicle is damaged and then repaired, the value might decrease as a result. If the person who caused the wreck has sufficient insurance, you can pursue a claim to recover those damages. If they don’t, then you could pursue a claim against your own UM / UIM policy to recover those damages.
What about Personal Injury Protection (PIP) vs Med Pay?
My recommendation is that you purchase the most Personal Injury Protection (PIP) coverage that you can. PIP is no fault coverage which means that it pays regardless of who was at fault for the wreck. If you were in a covered vehicle, and you’re injured, it pays for medical expenses and also missed time from work. It pays quickly whereas it can take months to years to fully resolve a case with the other driver’s insurance and / or with your own UM / UIM insurance. Also due to the Collateral Source Rule in Texas, you can recover from your PIP insurance and then recover again from the other driver’s insurance making sort of a double recovery that is perfectly legitimate since it’s due to coverage that you paid for.
I don’t like Med Pay. While it is better than nothing, it has some tricky requirements and the insurance company usually has the right of subrogation which means they get to be paid back if you make a recovery from the other driver’s insurance.
Definitely stick with PIP.
If I make a claim on my policy, won't my rates go up?
Maybe. If they do, then you can easily switch to one of the myriad insurance companies who are fighting for your business every day.
After all, what is the point of having coverage and then not using it when you need it out of fear that your rates will go up?
What about rental coverage? Won’t the other person’s insurance pay for a rental car for me if my car is damaged?
Again the answer is maybe.
Assuming that the other person is at fault for the wreck, most of the major insurance companies will set you up with a rental vehicle for a “reasonable” time while your vehicle is in for repairs.
What is “reasonable”? Usually, the insurance companies determine that by the number of days that the repair order says it will take to fix your car. If the repair order says it will take 3 days to fix your car, but the shop had to send the bumper back because the wrong one came in and it takes a couple extra days, good luck on getting the other person’s insurance company to pay for those extra days.
If you’re unlucky enough to get hit by someone with really bad insurance, you’ll likely have to pay upfront for a rental and then hope to be reimbursed after the fact.
So, rental coverage is definitely a good idea unless you’re prepared to pay for a rental out of pocket.
What does collision coverage cover?
Collision coverage pays to repair or replace your vehicle if it’s damaged in a collision.
What does comprehensive coverage cover?
Comprehensive coverage pays to repair or replace your vehicle if it is stolen or damaged by other than a collision (hail, theft, tree limb, etc.) You are probably required to have this if your vehicle is financed. If your vehicle is not financed, then it’s up to you, but you probably should have this coverage unless you’re financially willing and able to repair or replace your vehicle if something should happen to it.
What if my vehicle is totaled? Will I get enough to purchase another vehicle?
Maybe, maybe not. The insurance company whether it’s your own collision / comprehensive or UM/UIM coverage or the other driver’s liability coverage only owes for the Actual Cash Value (ACV) of the vehicle at the time of the loss. So, how much you owe, or how much you think your car is worth is not really relevant to how much the insurance company is going to pay for it. Sometimes insurance companies do under value vehicles and we have been successful in getting those values increased on occasion, but in most cases the value that the insurance company calculates for your vehicle is all that they’re going to pay.
If you owe more than your vehicle is worth, you should definitely carry GAP coverage. GAP coverage is there to pay the difference between what you owe and what the insurance company is obligated to pay for your vehicle.