Automobile insurance guide
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Car insurance protects you financially by paying for car repairs and medical bills for the other driver if you cause an accident. Depending on the type of coverage you have, it may also pay to repair or replace your car if it’s damaged or stolen.
Reading: What does texas liability insurance cover
texas has a consumer bill of rights for auto insurance. Your insurance company will give you a copy of the bill of rights when you get or renew a policy.
is auto insurance required?
Texas law requires drivers to show that they can pay for the accidents they cause. most drivers do this by purchasing auto liability insurance. Liability insurance pays to repair or replace the other driver’s car or other damaged property, and pays for other people’s medical expenses when you are at fault in an accident.
If you still owe money on your car, your lender will require you to have collision and comprehensive coverage.
Learn More: 10 Steps to Finding the Right Auto Insurance | look: what kind of car insurance do you need?
types of auto coverage
There are eight basic auto insurance coverages. you can choose if you want to buy the others.
- liability coverage pays to repair the other driver’s car if you caused the accident. it also pays the medical bills of the other driver and his passenger and some other expenses. Texas law requires you to have at least $30,000 of personal injury coverage, up to a total of $60,000 per accident, and $25,000 of property damage coverage. this is called 30/60/25 coverage.
Consider buying more liability coverage. Minimum liability limits may be too low if you cause a multi-vehicle accident or if the other driver’s car is destroyed. If you don’t have enough liability coverage to pay for the damages and injuries you cause, you may have to pay the rest out of pocket. the other driver could sue you.
- Collision coverage pays to repair or replace your car after an accident.
- Comprehensive Coverage (Non-Collision)pays if your car is stolen or damaged by fire, flood, vandalism, or something other than a collision.
- medical payments coverage pays your medical bills and those of your passengers. also pays if you are injured while riding in someone else’s car or while walking or bicycling.
- Personal Injury Protection (PIP) coverage is similar to medical payments coverage. pays your medical bills and those of your passengers. but it also pays for things like lost wages and other non-medical costs. all auto policies in texas include pip coverage. if you don’t want to, you must tell the company in writing.
- Uninsured/Underinsured Motorist coverage pays if you’re hit by someone who didn’t have insurance or didn’t have enough to pay your auto repair and medical bills. it also pays if you have a hit and run accident. insurance companies must offer you this coverage. if you don’t want to, you must tell the company in writing.
- towing and labor coverage pays to have your car towed if you can’t drive it. it also pays for labor to change a flat tire or jump start the battery.
- rental reimbursement coverage pays to rent a car if yours is stolen or repaired after an accident. some policies also pay for taxis or rideshare services.
Learn More: Need Additional Uninsured Motorist Coverage? | Take a look: what are the different types of car insurance coverage?
who is covered?
Most policies cover you, your family, and the people who drive your car with your permission. ask your agent or read your policy to find out who your policy covers and if anyone is excluded from coverage.
what does my policy cover?
Coverages vary by policy and depend on the types of coverage you choose. This table shows some of the things that most policies do and do not cover. read your policy or talk to your agent to be sure of your exact coverages.
what happens if i buy a new car? is it covered?
If you buy a new car, your current insurance will automatically cover it for about 20 days. the type of coverage depends on whether the car is an additional or replacement car.
- an additional car gets the same coverage as the car with the most coverage on your policy.
- A replacement car gets the same coverage as the car it replaces on your policy.
- your driving and claims history. Insurance companies will charge you more if you have had accidents or received tickets. some companies may refuse to sell you a policy.
- where you keep your car. Rates are higher if you live in a city. This is because people in cities are more likely to have accidents or have their cars stolen than people in rural areas. rates may also vary between zip codes in the same city.
- the type of car you have. Comprehensive and collision rates are higher for luxury, performance and sports cars. rates are also higher for cars that cost more to repair.
- how you use your car. Your rates will be higher if you drive your car to and from work or use it for business.
- your credit score. Some companies use your credit score to decide how much to charge you. To find out which companies use credit scores, visit helpinsure.com.
- turn you away or charge you more because of your race, color, religion, or national origin.
- reject you or charge you more because of your age, gender, marital status, geographic location, or disability, unless the company can show that you are at greater risk of loss than others who are willing to insure.
- turn you down, charge you more, or treat you differently than others in your rate or risk class, unless the company can show you are a higher risk than others.
- reject you or charge you more just because of your credit score.
- air bags, anti-lock brakes, and anti-theft devices in your car.
- completed a defensive driving or driver’s education course.
- more than one car on a policy.
- other policies with the same insurance company.
- no claims and a good driving record.
- stop paying your premiums.
- files a fraudulent claim.
- your driver’s license or car registration is suspended or revoked (this also applies to other drivers who live with you or use your car).
- weather damage.
- damage from hitting an animal.
- accidents or incidents for which you cannot reasonably be blamed, unless you have more than one of these claims in 12 months.
- damage from flying gravel or other flying or falling objects (the company may increase your deductible if you have three of these claims in 36 months).
- towing and labor (the company may refuse to renew your towing and labor coverage if you have four of these claims in 36 months).
- Get the other driver’s name, address, phone number, and license plate number. Write down the exact name of the other driver’s insurance company, phone number of the company and the policy number . To save time, take a photo of the other driver’s insurance card. If the other driver refuses to tell you the name of their insurance company, call the police.
- Give the other driver the same information about yourself.
- Get the names, addresses, and phone numbers of any witnesses to the accident. Give this information to the insurance company. Independent witnesses can help prove fault if you were in an accident caused by another driver. If you have no witnesses and the other driver denies fault, your insurance company may deny your claim.
- Call the police if you were hit by a driver who left the scene. Your uninsured motorist coverage won’t pay for a hit and run accident if you didn’t report it to the police.
- call the police if anyone is hurt.
- write down the time, date and exact location of the accident. also record any special circumstances such as weather and road conditions. take pictures of the accident scene. provide this information to the insurance company.
- Tell your company about the accident as soon as possible. Most companies have deadlines for filing claims. Your insurance card should have a number you can call to report claims. explain what happened and answer the questions as detailed as possible.
- Send the company copies of the police report of the accident. It usually takes a few days for the police to file a report. get the officer’s name and badge number so you can follow up if needed.
- Inform the company if you were injured. if you went to the emergency room or to a doctor, give the company copies of the medical reports and bills from the doctors.
- tell you that they received your claim within 15 days of receiving the notice. the company may ask you for a signed proof of loss form or more information. the company may also ask you to have a medical exam.
- have your damage checked by an adjuster. the adjuster will estimate the cost of repairs. the company will base your payment on the adjuster’s estimate. If the damage turns out to be worse than the adjuster originally thought, you or the repair shop can talk to the adjuster to increase the estimate. If you can drive your car, the company might ask you to take your car to one of their claims centers so an adjuster can look at it. some companies may ask you to obtain your own estimates and provide them to the company.
- accept or reject your claim within 15 business days of getting all the information it needs from you. A company that needs more time may take 45 days to decide whether to pay your claim. should tell you the reason for the delay. If they deny your claim, they must tell you why in writing.
- will send you a check within five business days of accepting your claim payment.
- You have uninsured or underinsured motorist coverage and the driver who caused the accident was uninsured or underinsured.
- You have uninsured or underinsured motorist coverage and the accident was a hit and run.
- You have rental reimbursement coverage and were in an accident.
- You have comprehensive coverage and your car is stolen.
- request an appraisal. The appraisal process is for disputes over the amount of your claim. If you use appraisal, you and the insurance company each hire an appraiser. the two raters then choose a third rater as referee. Your adjuster and the company’s adjuster each calculate the amount of your loss. if the estimates are different, the referee makes the final decision. The arbitrator’s decision is binding on both you and the insurance company. you pay for your appraiser and half of the arbitrator’s expenses. you can use the appraisal only for disputes with your insurance company. you may not use it to resolve disputes with someone else’s insurance company.
- complain to us. Your complaint must be in writing. you can use our online complaint portal. understand that our ability to help may be limited. for example, we cannot decide who was at fault in an accident or determine damage amounts.
- Solve your problem in court. You may need to file a lawsuit to solve the problem. If your claim is for less than $10,000, you can use the court of law. The Justice Court is a special court that handles small claims disputes. You do not need a lawyer, but you must pay a filing fee and other court costs up front. if you win, you can get that money back. For more information, call your county justice of the peace office.
Tell your company about a new car as soon as you can to avoid a gap in coverage.
Am I covered if I drive someone else’s car?
rental cars. rental agencies offer damage waivers and liability policies. damage waiver is not insurance. it is an agreement that the rental agency will not charge you for damage to a car you rent.
You probably don’t need the rental agency’s liability policy. Your own auto policy will generally cover you while driving a rental car for personal use. however, you may not be covered if you drive your rental car to work.
Before you rent a car, ask your agent if you need the rental agency’s liability policy and damage waiver.
more information: do I need to take out insurance when I rent a car?
loaner cars. If you cause an accident while driving a loaner car, the car owner’s insurance pays the claims. If your landlord doesn’t have insurance, or doesn’t have enough to pay for the damages and injuries you caused, your insurance will pay.
If you don’t own a car, but borrow a car frequently, you can purchase a third-party liability policy that pays for damages and injuries you cause to others while driving a borrowed car. does not pay for your injuries or damage to the car you drive.
If you borrow a car from a repair shop, your liability insurance will pay for the damage to the car. It will also pay for other people’s injuries and damages if you are at fault in an accident. check your liability limits to make sure they are enough to pay for the damages.
I’m driving to Mexico, am I covered?
Mexico does not recognize US auto policies. Some companies offer endorsements for short trips to Mexico, but the coverage may not meet Mexico’s legal requirements. If you drive to Mexico, you must purchase a Mexican liability insurance policy. some texas agents sell them. your agent might be able to help you find an agent who does.
deductibles and dollar limits
You must meet a deductible for some types of claims.
You must pay a deductible for collision, comprehensive, and uninsured/underinsured motorist claims. A deductible is the amount of a claim that you must pay yourself. For example, if you have a $1,500 collision claim and your policy has a $500 collision deductible, the insurance company will deduct $500 from your claim amount and pay you $1,000. You don’t have to pay a deductible for claims against another driver’s insurance company.
more information: what to know about deductibles
some coverages pay only up to the dollar limits of the policy.
Liability, Personal Injury Protection, Uninsured/Underinsured Motorist, Towing and Labor and Rental coverages have dollar limits. this is the most the company will pay, even if the cost is higher. if you don’t have enough coverage, you’ll have to pay the difference yourself. collision and comprehensive coverages have no dollar limits.
The first page of your policy is the declaration page. It has a summary of your policy, including your coverages, dollar limits, and deductibles.
car insurance for young drivers
You have two options to cover your young drivers. you can add them to your policy or you can buy a separate policy for them. adding them to your policy is usually cheaper.
Some companies require that you include everyone who lives with you and is of driving age on your policy. tell your company when someone in your family starts driving or turns 16. If you don’t tell the company, and the company finds out later, the company will charge you the extra premium you should have paid. the company could also deny any claims you have or choose not to renew your policy.
See also : Gap Insurance for a Used Car: Everything You Need to Know
If a teen is the primary driver of a car, the company will base the premium on that car. otherwise, the company will base the teen’s premium on the family’s car with the highest rate.
see: teen driving safety
children in school or who do not live with you
Some companies require you to keep young drivers on your policy, even if they are in school. tell your insurance company if you have a child who lives in another city to attend school. If your child has a car, the company may charge you differently because the rates are based on where the car is normally located. If your son doesn’t have a car, he may be able to get a discount on his premium. If your child goes to school in another state, check the laws of that state to make sure you have enough liability coverage.
Texas law requires insurance companies to charge rates that are fair, reasonable, and appropriate for the risks they cover. We don’t approve rates in advance, but if we find an insurance company’s rates are too high, we may require you to pay reimbursements to people you overcharged. insurance companies can appeal our decisions.
how do companies decide how much to charge me?
Insurance companies use a process called underwriting to decide whether to sell you a policy and how much to charge you. the amount you pay for insurance is called the premium.
Most companies consider these things when deciding your auto insurance premium:
learn more: how your credit score can affect your insurance rates
Insurance companies review your claims history.
Most companies use the comprehensive loss (track) underwriting exchange to learn about your claims history. a company may charge you more or refuse to sell you a policy based on the information in your trail report. You can get a free copy of your report every year. call lexisnexis at 866-312-8076.
more information: how to get a clue about your claims history
An insurance company cannot:
save money on your insurance
Discounts help lower your premium. each company decides what discounts to offer and the amount of the discount. you may be able to get a discount if you have:
learn more: how driving could save you money on car insurance | see: how to compare auto insurance rates
lose your insurance
If you ask, a company must tell you in writing why it declined, canceled or didn’t renew your policy. You can complain to us if you think a company improperly denied, canceled or failed to renew your policy.
what happens if a company cancels my policy or doesn’t renew it?
cancellation means that you or the insurance company cancels the coverage before the end date of your policy. a company must give you 10 days notice before canceling your policy. A company can cancel your policy in the first 60 days for any reason, unless the cancellation breaks a law.
An insurance company can cancel your policy at any time if:
If you or the company cancel your policy, the company must refund any unearned premium within 15 days of the cancellation date. Unearned premium is the amount you paid up front that didn’t go toward coverage. For example, let’s say your premium is $100 a month and you paid six months in advance. if you cancel your policy after one month, the company will owe you $500 in unearned premiums.
non-renewal means that a company refuses to renew your policy when it expires. a company must tell you in writing that it will not renew your policy. must give you at least 30 days notice before your policy expires.
A company can cancel the renewal of its policy only after it has been in force for 12 months. This means that if you bought a six-month policy, the company cannot refuse to renew it when the first six months are up. you must renew it to give you a full 12 months of coverage.
A company cannot refuse to renew your policy because of your age. You also cannot cancel your policy renewal because you had claims for:
If you receive a notice of non-renewal or cancellation, start shopping for new insurance right away. Be sure to get a new policy before your old policy ends so you don’t have a lapse in your liability coverage.
If you still owe money on your car, your lender will require you to have collision and comprehensive coverage. If you cancel or lose these coverages, your lender will purchase interest-only coverage and add the cost to your loan payment. This coverage is expensive and only protects the lender.
what if I can’t find a company to sell me a policy?
If you can’t find a company willing to sell you a policy, you can get basic coverage through the Texas Automobile Insurance Plans Association (TAIPA). you can get taipa coverage if you have been turned down by two insurance companies.
taipa sells liability, personal injury and uninsured/underinsured motorist coverages. does not sell collision or comprehensive coverage or liability limits higher than those required by state law.
Taipa coverage is more expensive than coverage from other insurance companies. Taipa also charges more if you have had fines or accidents than other companies.
If you have taipa coverage and have been ticket-free and accident-free for a year, your rates may go down. If you have no tickets or accidents for three years, your insurance company must offer you a cheaper policy outside of Taipa.
To get taipa coverage, talk to your agent.
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To help the claim process run smoothly, follow these tips:
learn more: will my premium go up if i file a claim? | see: 5 tips to avoid scams after an accident
After I file my claim, what happens?
Texas law sets deadlines for insurance companies to act after a claim is filed. a company must:
The prompt payment law does not apply if another driver’s insurance company is paying the claim. but the company must act in good faith and try to resolve your claim quickly and fairly.
learn more: work with an insurance adjuster | watch: protect yourself from becoming a victim after the accident
Insurance companies will pay to repair or replace your car only up to its actual cash value. actual cash value is the cost to replace your car, less depreciation. depreciation is a decrease in value due to wear or age.
Some companies may provide you with a list of preferred repair shops, but cannot require you to use a shop on their list.
The insurance company is only obligated to pay for parts of the same type and quality as those that were damaged. you don’t have to pay for original manufacturer parts.
what if the other driver’s insurance company refuses to pay my claim?
If you think the other driver was at fault, but your insurance company won’t pay your claim, file a claim with your own insurance company. you must have collision coverage to do this. your insurance company will probably try to collect from the other driver’s company.
Please note that if you file a claim with your own company, you will have to pay a deductible.
More information: Did you have an accident caused by the other driver?
what if the other driver’s limits aren’t high enough to pay my bills?
If the other driver’s policy limits aren’t high enough to pay for all of your car repairs, file a claim with your insurance company. your collision or uninsured/underinsured motorist coverage should pay the difference. if you file a claim with your insurance company, you will have to pay a deductible.
If the other driver’s limits aren’t enough to cover all of your medical bills, file a claim with your auto insurance company or health insurance company. Your auto insurance company will use your PIP coverage, medical payments coverage, or your uninsured/underinsured motorist coverage to pay the difference. you may have to pay a deductible.
what if the insurance company totals my car?
If the cost to repair your car is close to its current value, the company will probably decide to total it. this means that the company will pay you to replace your car instead of repairing it.
If the company totals your car, it will pay the value of your car less depreciation. depreciation is a decrease in value due to wear or age. For example, if your car is 10 years old, the company will pay you 10-year-old used car value. you will not pay to replace your car with a new car that is the same make and model as your totaled car.
Be prepared to negotiate with the company to get what you think is a fair deal. A company might be able to increase your offer if you can show that your car would sell for a higher price. Get written price quotes for a similar car from used car dealers. You can also look in the classifieds section of your local newspaper for used car prices.
If you still owe money on your car, the amount the company pays you if you total your car may not be enough to pay off your loan. This will happen if the market value of your car is less than what it owes. Auto dealers and lenders often offer guaranteed auto protection, or differential insurance, for this.
more information: do I need differential insurance for my new car?
If you want to keep your car, the insurance company will subtract your residual value from the settlement amount. If your car is given a non-repairable title, it cannot be retitled or registered.
more information: my car was totaled! now what? | look: what happens if your car is totaled?
Will the insurance company pay for a rental car?
If your accident was caused by another driver, the other driver’s insurance company will pay for a rental car. you can keep the rental car for as long as the company thinks is reasonable for your car to be repaired. the company will base the amount of time on the estimated number of working hours. Be sure to tell the adjuster about any delays in repairing your car. the company might extend the rental if there are delays because the repair shop had to order parts or found more damage.
If the company takes your car in full, they will probably stop paying the rent a few days after notifying you.
Your insurance company will pay for a rental car if:
Your insurance company will pay for a rental car only for as long as it deems reasonable to repair or replace your car. You will pay a fixed amount each day and only up to the rental coverage dollar limits of your policy.
If you were injured in an accident caused by another driver, the other driver’s insurance company will offer you a settlement to cover your medical bills related to the accident. The company will also ask you to sign a statement promising not to file any more claims for the accident. Before you sign the release, talk to your doctor about any future medical treatment you may need. Consider this information to decide if the company’s settlement offer is fair.
If you think a company is delaying payment to pressure you into signing the disclaimer, file a complaint.
If you disagree with the adjuster’s estimate or the amount the company offers to pay you, tell the insurance company why. you may be able to work things out by talking to the company or adjuster. if that doesn’t solve the problem, here are your options:
more information: what happens if my insurance doesn’t pay enough?