“How much insurance should I have?” This is a question that you’d much rather ask before you need coverage than after a loss. As a personal injury lawyer, one of the worst situations we see is when a person is struck by an uninsured or underinsured motorist and the victim does not have a policy that will cover themselves. Think about it for a second: Texas mandates you get insurance to cover others. Shouldn’t you take it upon yourself to make sure you are covered in any situation? While the specific answer to how much insurance you should have depends on your unique situation, there are key types and amounts of coverage every Texan needs to protect themselves financially, their loved ones, and their assets. Texas has special considerations compared to other states, from minimum auto insurance requirements to increased risks from severe weather. In this ultimate guide, we will break down the must-have policies, explain how to determine the right coverage levels for your needs, and share insider tips to get the best protection at the lowest rates, all in plain, easy-to-understand language. If you want to safeguard your finances as a Texas resident, you’ve come to the right place – let’s dive in!
Minimum Car Insurance Coverage in Texas
In Texas, state law requires all drivers to maintain at least the following minimum levels of liability insurance coverage:
- Bodily Injury Liability: $30,000 per person and $60,000 per accident
- Property Damage Liability: $25,000 per accident
These minimum requirements help ensure drivers have coverage for injuries and damages they might cause in an accident. However, individual insurance needs can vary, and it might be beneficial to consider additional coverage options based on personal circumstances.
Additional Coverage Options
| Coverage Type | Description | State Requirements |
|---|---|---|
| Bodily Injury Liability | Covers medical expenses, rehabilitation, and legal fees for individuals injured in an accident where the insured is at fault. | $30,000 per person and $60,000 per accident |
| Property Damage Liability | Covers the cost of repairing or replacing property, such as vehicles or structures, damaged in an accident where the insured is at fault. | $25,000 limit |
| Uninsured Motorist | Provides protection for bodily injury and property damage in the event of an accident with an uninsured driver.
Uninsured motorist bodily injury: $30,000 per person and $60,000 per accident unless rejected Uninsured motorist property damage: $25,000 with a $250 deductible unless rejected |
Not required |
| Underinsured Motorist | Provides protection in the event of an accident with a driver who does not have sufficient insurance coverage. | Not required |
| Personal Injury Protection (PIP) | Pays for medical expenses, lost wages, and other related costs for the policyholder and passengers in an accident, regardless of fault. | Not required – $2,500 must be offered by the insurer. |
| Collision | Covers the cost of repairing or replacing the insured’s vehicle if damaged in an accident, regardless of fault. | Not required |
| Comprehensive | Covers the cost of repairing or replacing the insured’s vehicle if damaged in non-collision events, such as theft, vandalism, or natural disasters. | Not required |
Texas Liability Insurance Coverage
When you purchase liability car insurance in Texas, it includes two main components:
Bodily Injury Liability
Bodily injury liability covers others’ costs such as medical bills, lost wages, pain and suffering, and funeral expenses if they are injured in an accident you cause. It also covers your legal expenses if you are sued following an accident.
Property Damage Liability
Covers repairs to property you damage in an accident you cause, including other people’s cars, fences, or other structures. It may also cover the cost of other people’s belongings destroyed in a car accident or a rental car for the other driver.
Uninsured/Underinsured Motorist (UM/UIM) Coverage
Uninsured/underinsured motorist (UM/UIM) coverage provides additional financial protection in the event of an accident with a driver who has little or no insurance. This coverage helps pay for car repairs and medical bills, with a $250 deductible for car repairs.
Key Benefits of UM/UIM Coverage
- Comprehensive Coverage: Pays for car repairs, medical bills, property replacement, rental car costs, and pain and suffering expenses.
- Long-term Care: Provides financial support for long-term care needs or if you cannot work due to accident injuries.
- Hit-and-Run Protection: This covers you if you are involved in a hit-and-run accident where the at-fault driver cannot be found.
Who Is Covered by UM/UIM Insurance?
UM/UIM coverage extends to:
- You, the policyholder
- Your family members
- Passengers in your vehicle
- Anyone driving your car with your permission
How much Uninsured Motorist (UM) or Underinsured Motorist (UIM) Coverage should I have?
In Texas, the amount of Uninsured Motorist (UM) or Underinsured Motorist (UIM) coverage you should have depends on various factors, including your financial situation and risk tolerance. However, it’s important to understand the legal minimums and the maximum coverage available to make an informed decision.
Texas law requires that insurance companies offer UM/UIM coverage in the same amounts as your liability coverage unless you reject it in writing.
While there is no state-imposed maximum limit for UM/UIM coverage, insurers typically offer higher limits to match your liability coverage. Common maximum limits include:
- $500,000 per person for bodily injury
- $500,000 per accident for bodily injury
- $100,000 or more per accident for property damage
Some insurers may offer even higher limits, or umbrella policies that can extend your coverage beyond these amounts.
When deciding on the amount of UM/UIM coverage, consider the following:
- Personal Assets: Protect your assets in the event of a severe accident.
- Medical Costs: Ensure sufficient coverage for potential medical expenses.
- Vehicle Value: Consider the value of your vehicle for property damage coverage.
- Risk Exposure: Think about the likelihood of encountering uninsured or underinsured drivers in your area.
How much Personal Injury Protection (PIP) Coverage Should You Have in Texas?
Under Texas law, personal injury protection (PIP) coverage must be offered with all auto insurance policies. You can only opt out of PIP coverage by specifically denying it in writing when purchasing your policy, which is not recommended.
- Health Insurance: If you have good health insurance, you might opt for lower PIP coverage. However, remember that PIP covers more than just medical expenses, including lost wages and household services.
- Risk Tolerance: Consider your comfort level with risk and how much financial protection you want in case of an accident.
- Budget: Higher PIP coverage comes with higher premiums. Balance your need for coverage with what you can afford.
While the minimum PIP coverage in Texas is $2,500, you may want to consider higher limits, such as $10,000 or more, to ensure you have adequate protection for medical expenses, lost wages, and other related costs in the event of an accident.
What Is PIP Coverage?
PIP coverage, also known as “no-fault coverage,” means that regardless of who caused the accident, you are entitled to PIP benefits to help pay for medical and other expenses. PIP covers:
- 100% of medical-related expenses, including ambulance services, hospital visits, surgical procedures, X-rays, dental services, bloodwork, nursing, rehabilitation services, and funeral costs.
- 80% of your lost wages due to injuries from the accident.
- Costs for essential services you regularly provide to your family or household if you are not an income producer.
Who Is Covered by PIP?
PIP coverage extends to:
- You, the policyholder
- Drivers listed on your auto insurance policy
- Passengers in your vehicle at the time of the accident
- Members of your household as defined by your policy
Multiple PIP Claims
UM/UIM coverage limits apply individually to all covered persons. For example, if three people are in your car during a collision, each can make a PIP claim. Additionally, if you are a passenger in an accident, you can collect benefits from both your own PIP policy and the driver’s PIP policy, if applicable. However, you cannot double-dip if one policy covers all your expenses.
How Much MedPay Coverage Should You Get in Texas?
Medical Payments (Med-Pay) coverage is an optional add-on to your auto insurance policy that covers reasonable medical and funeral expenses resulting from an accident. Unlike Personal Injury Protection (PIP), insurance companies are not required to offer Med-Pay coverage.
Key Differences and Coverage
- Coverage Period: Med-Pay often only covers expenses incurred within one year of the accident.
- Reimbursement: It may only reimburse for health insurance deductibles and co-pays.
- Exclusions: Med-Pay does not cover lost wages or essential services if the injured person is unemployed.
Umbrella Policies Coverage Beyond Auto Insurance Limits
An umbrella policy is a type of insurance designed to provide extra liability coverage beyond the limits of your standard policies, such as home, auto, or boat insurance. This additional layer of protection kicks in when the liability limits of your underlying policies are exhausted, offering broader coverage and higher limits.
Key Features of an Umbrella Policy:
- Extended Liability Coverage: Umbrella policies provide additional liability coverage that exceeds the limits of your existing policies. For example, if your auto insurance has a liability limit of $300,000 and you’re involved in an accident resulting in $500,000 in damages, your umbrella policy would cover the remaining $200,000.
- Broader Protection: These policies often cover claims that might not be included in your other insurance policies, such as libel, slander, and certain lawsuits.
- Affordable Premiums: Considering the high level of coverage they offer, umbrella policies are generally affordable. This cost-effectiveness makes them an attractive option for many people looking to protect their assets from significant liability claims.
- Peace of Mind: With an umbrella policy, you can feel more secure knowing that you have additional protection against large, potentially devastating financial losses.
Who Needs an Umbrella Policy?
Anyone with significant assets or potential exposure to large liability claims can benefit from an umbrella policy. This includes homeowners, landlords, business owners, and even individuals with substantial savings or investments. Essentially, if your assets exceed the liability limits of your primary insurance policies, an umbrella policy can help protect those assets.
So How Much Insurance Should You Have?
The best insurance portfolio covers you in case the worst should happen. Your liability coverage should be enough to cover you and your assets if you are sued after an accident. Auto liability coverage is a good start. If you have assets to protect, getting an umbrella policy in place also makes sense. Beyond that you should protect yourself against the rising number of uninsured and underinsured motorists in Texas by getting a UM/UIM policy with high limits. Finally, add PIP or MedPay coverage so you have quick access to coverage for medical payments that will cover the immediate expenses after an accident. While it takes some effort to set up the right insurance portfolio, the peace of mind is more than worth it. Think of insurance as a critical part of your financial safety net – without it, one unexpected setback could derail your stability and goals.