Texas Auto Insurance Coverage Explained

After answering questions from a new client today about how much money I could get for him and where that money would come from, I wanted to explain possible sources of recovery that will reimburse you for your damages if you unfortunately have been in an automobile or truck collision here in North Texas. I have been successfully representing injured Texans in these cases for over 32 years and they are the only ones I handle.

I start with the at fault motorist’s insurance coverage. Here is a summary of a standard Texas

auto policy and how it can help you recover your damages:

1. Liability. Since January 1, 2011, Texas law has required drivers to obtain liability insurance with a minimum limit of $30,000 per injured person, $60,000 for all injured persons, and $25,000 for all property damage. Sometimes the other driver carries higher limits and occasionally he has assets that are not “judgment proof,” i.e. are not exempt under our state’s lenient homestead and exemption statutes and which can be levied upon, if damages are substantial. Underinsured motorists and other coverages may apply.

What it pays: The following expenses, up to your policy’s dollar limits, for the people in the other car involved in an accident you, or someone covered by your policy, caused:

■ medical and funeral costs, lost wages, and compensation for pain and suffering
■ car repair or replacement costs
■ car rental while the other driver’s car is being repaired

Liability insurance also pays your attorney fees if someone sues you because of the accident. If you are arrested following an accident, liability insurance will pay up to $250 for bail.

Who it covers:

■ you and your family members. (Family members include anyone living in your home re lated to you by blood, marriage, or adoption.
■ this includes your spouse, children, in-laws, adopted children, wards, and foster children.)
■ other people driving your car with your permission
■ family members attending school away from home
■ spouses living elsewhere during a martial separation might be covered.

You and your family members might be covered when driving someone else’s car – including a rental car – but not a car that you don’t own but have regular access to, such as a company car

Some policies won’t cover other people, including family members, unless they’re specifically named in the policy. Your policy’s declarations page should list the names of all of the people covered by the policy.

2. Collision

What it pays: The cost of repairing or replacing your car after an accident. You will only receive the amount of your car’s actual cash value, minus your deductible. Actual cash value is the market value of a car like yours without damages.

Who it covers: You, your family members, passengers in your car, and others driving your car with your permission.

3. Comprehensive

What it pays: The cost of replacing or repairing your car if it is stolen or damaged by fire, vandalism, hail, or an event other than a collision.

Comprehensive coverage also pays for a rental car or other temporary transportation if your car is stolen. Your policy won’t pay for an auto theft unless you report it to police.

Payment is limited to your car’s actual cash value, minus your deductible.

4. Medical payments

What it pays: Your medical and funeral bills resulting from accidents, including an accident involving a pedestrian or bicyclist.

Who it covers: You, your family members, and passengers in your car, regardless of who caused the accident.

5. Personal injury protection

What it pays: Same as medical payments coverage, plus 80 percent of lost income and the cost of hiring a caregiver for an injured person.

Who it covers: You, your family members, and passengers in your car, regardless of who caused the accident.

An insurance company must offer you $2,500 in PIP, but you can buy more. If you don’t want PIP, you must reject it in writing.

6. Uninsured/underinsured Motorist (UM/UIM)

What it pays: Your expenses from an accident caused by an uninsured motorist or a motorist who did not have enough insurance to cover your bills, up to your policy’s dollar limits. Also pays for accidents caused by a hit-and-run driver if you promptly reported the accident to police.

There is an automatic $250.00 (or more) deductible, which means you must pay the first $250 (or more) of the expenses yourself before the company will begin to pay.

There are two types of UM/UIM coverage:

■ Bodily injury UM/UIM pays for medical bills, lost wages, pain and suffering, disfigurement, and permanent or partial disability. There is not a deductible with this type.
■ Property damage UM/UIM pays for auto repairs, a rental car, and damage to items in your car.

Who it covers: You, your family members, passengers in your car, and others driving your car with your permission.

Insurance companies must offer UM/UIM coverage. If you don’t want it, you must reject it in writing.

7. Towing and labor

What it pays: Towing charges when your car can’t be driven. Also pays labor charges, such as changing a tire on the side of the street.

8. Rental reimbursement

What it pays: A set daily amount for a rental car if your car is stolen or is being repaired. Your company only pays for repairs that were caused by an event that your policy covers.

Other Coverages

You may buy other coverages for an additional premium to cover items in your car, new or additional cars, rental cars, or driving in Mexico.

Stereo Equipment

Your policy won’t pay for CDs, MP3 players, cell phones, citizen band radios, or stereo equipment not installed in your car.

New or Additional Cars

If you buy another car, your policy might automatically cover it with certain limitations. Read your policy or ask your agent to find out if you have this coverage.

Insurance companies usually give additional cars the same amount of coverage as your car with the most coverage. For example, if you have two cars – one with liability coverage only and one with liability, collision, and comprehensive coverages – and you buy a third car, the third car will automatically have liability, collision, and comprehensive coverage.

A replacement car usually has the same coverage as the car it replaced. For example, if you trade in an older car that only had liability coverage, the new car will automatically have only liability coverage.

Be sure to tell your insurance company as soon as possible that you have added or replaced a car and which coverages you want. You could lose coverage on an additional or replacement car if you wait longer than the number of days specified in your policy to notify your insurance company.

Rental Cars

Rental car agencies offer collision damage waivers and liability policies.

The collision damage waiver is not insurance. It is an agreement that the rental company will not, with certain exceptions, try to make you pay for any damage to a car you rent.

If you have auto insurance, your policy may already cover damage to a rental car. Your coverage limit, however, might be less than the value of a rental car. Read your policy to know what’s covered and the coverage limits. If your coverage limit is too low, consider increasing it. You will pay more in premium, but it might be cheaper than buying additional coverage through the rental agency, especially if you rent cars often.

If you don’t own a car, but borrow or rent cars often, you can buy a nonowner liability policy. A non-owner policy pays for damages and injuries you cause when driving a borrowed or rented car, but it does not pay for your injuries or damage to the car you are driving.

Driving in other States, Canada, and Mexico

Your insurance should cover you if you drive in other U.S. states and Canada. Your policy will not cover you in Mexico because Mexico does not recognize U.S. auto liability policies.

Mexican authorities may hold drivers criminally and financially responsible for any auto accidents they cause. If you’re in an accident that results in an injury, police may keep you until they determine who is at fault. You will be asked to show you have insurance the Mexican government will accept or prove that you can pay any judgment against you.

Some U.S. insurance companies provide a free endorsement for your policy that covers occasional trips of up to 10 days and up to 25 miles into Mexico. You can buy coverage for longer stays, but it usually only covers you within 25 miles of the border. These endorsements might not meet Mexican legal requirements.

Some companies sell a Mexico tourist endorsement to attach to your Texas policy. This endorsement extends your liability coverage to pay costs exceeding a Mexican liability policy’s limits. It covers trips of any distance and any length of time. Ask your agent which endorsements your insurance company offers.
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