Texas uses a “fault” system when it comes to liability for a car accident, meaning it requires you to be able to pay for any damages and injuries from a car accident you caused. When you buy liability insurance to comply with the law, your policy must have the following minimum limits: $30,000 for each injured person; $60,000 for injuries per incident; and $25,000 for property damage. This basic coverage, known as “30/60/25,” pays the medical bills, property damage bills and other costs of drivers, passengers and pedestrians who are injured or have their vehicle damaged in a car accident you caused.
Brad Parker explains why these limits are often problematic. “If you’re seriously injured in a car wreck, $30,000 isn’t nearly enough to cover all of the pain, suffering, medical treatment and lost wages. I can’t stress enough how important it is to purchase additional coverage to make sure you are protected.”
Collision and Comprehensive Coverage
With collision coverage, if the insurance company decides your car can be fixed it will pay you the cost of repairs. If the company totals your car, it will pay you the actual cash value of your car. Actual cash value is the current value of your car, minus depreciation. Whether the company decides to repair your car or total it, you’ll get only up to the dollar limits of your policy. Your policy’s dollar limits are shown on the declarations page of your policy. Collision covers you, your family members and anyone else insured under your policy.
Comprehensive coverage pays the cost of replacing or repairing your car if it’s stolen or damaged by fire, vandalism, hail, falling objects or an event other than a collision. Comprehensive coverage might pay for a rental car. Your policy won't pay to replace a stolen car unless you report the theft to police.
Underinsured and Uninsured Coverage
Uninsured motorist (UM) coverage protects you if you're in an accident with an at-fault driver who doesn't carry liability insurance. Underinsured motorist (UIM) coverage, on the other hand, steps in when you're in an accident with an at-fault driver whose liability limits are too low to cover the damage or medical expenses. The at-fault driver's insurance will typically pay for all damages up to the policy limits, and then your underinsured motorist coverage will cover the excess amount up to the limits you select.
Parker says, “If you are involved in an auto accident with someone who does not carry insurance and you haven’t protected yourself with UIM coverage, there isn’t much you can do. You can hope they have some assets, but Texas is a very debtor oriented state where people’s assets are heavily protected. It’s probable that there will be no recovery whatsoever.”
Like liability insurance, uninsured and underinsured motorist breaks down into two coverage types: bodily injury and property damage. Uninsured/underinsured motorist bodily injury coverage (UMBI) can cover medical expenses, lost wages and injury-related expenses for you, any permissive drivers, and your passengers. It can also provide coverage for injuries sustained in hit-and-run accidents. Uninsured/underinsured motorist property damage coverage (UMPD) helps if your car is damaged in an accident with an uninsured or underinsured driver. Unlike UMBI, this coverage doesn't protect against damage caused by hit-and-run collisions.
Personal Injury Protection Insurance
PIP stands for personal insurance protection (personal injury protection), and it is an extension of car insurance that covers medical expenses and, in many cases, lost wages. It is often called “no-fault” coverage because its inherent comprehensiveness pays out claims agnostic of who is at fault in the accident. If you have PIP insurance and are hurt in accident, you can receive maximum benefits whether or not the accident was your fault. On top of medical bills and lost wages, PIP insurance can also cover expenses like transportation to medical appointments.
Auto Insurance Alphabet
BI – Bodily Injury
PAP – Personal Auto Policy
PIP – Personal Injury Protection
TAIPA – Texas Automobile Insurance Plan Association
UM – Uninsured Motorist Insurance
UIM – Underinsured Motorist Insurance
UIMV – Uninsured Motor Vehicle
UMBI – Uninsured/Underinsured Motorist Bodily Injury Coverage
UMPD – Uninsured/Underinsured Motorist Property Damage Coverage