To legally drive, you need to have insurance on your vehicle. Every state has a different insurance system, which can lead to a lot of confusion and misinformation about coverage requirements and how making a claim really works.
One of the most important distinctions between different insurance systems is whether coverage is fault-based or no-fault. In fault-based insurance systems, the policy covering the person who causes the crash will pay for the losses suffered by everyone else involved. Such a system reduces the costs to companies that insure drivers who are not responsible for crashes, but it also leaves those hurt by other drivers dependent on their coverage.
In no-fault insurance cases, the driver’s coverage pays for their losses, regardless of who caused the crash. Which system does Texas use for automobile coverage?
Texas employees a hybrid model for motor vehicle insurance
Your coverage protects you when you cause a crash that damages property or hurts someone and when someone else hits your vehicle. Texas requires both limited no-fault medical coverage and liability coverage for medical costs and property damage.
You will have to buy liability coverage, which is fault-based insurance. Texas requires that you carry a minimum of $25,000 in property damage coverage and $30,000 in medical coverage for crashes that injure one person that increases to $60,000 if more than one person suffers injuries in the collision. This coverage is fault-based, meaning you have to cause the crash for someone to make a claim against it.
Personal injury protection (PIP) coverage, however, is no-fault insurance. You and the passengers in your vehicle can make a claim against this coverage regardless of fault. You have to carry at least $2,500 in PIP, but as with liability coverage, paying for higher coverage can be a smart investment.
You can maximize your protection before a crash
In addition to buying more than the minimum amount of liability protection, drivers can purchase additional kinds of coverage. Optional coverage for drivers in Texas includes collision coverage and uninsured driver protection.
Having enough insurance can help protect you from major financial losses after a car crash. Knowing when to make a claim against your own policy and when to push for payment by another driver can also help you keep your insurance costs low.