Auto Insurance

The Facts About Texas Auto Insurance

If you are a car owner or driver in Austin, Dallas, Fort Worth, or any other surrounding area in the state of Texas, you need to be familiar with Texas auto insurance regulations. State law requires that you pay the costs associated with any auto accident for which you are responsible. Texas has several types of coverage, providing drivers and car owners with varying levels of legal protection and financial reimbursement.

The best way to determine which type of auto insurance coverage is best for you is by talking to an independent agent and comparing quotes online. Here, you can do all that and more — compare policies, request quotes, and speak with an independent agent. We will help you decide which auto insurance policy will provide you with the most protection and cover any of your potential expenses.


As a driver in Texas, you need proof that you can pay for medical expenses, and the repair/replacement of other drivers’ cars when you are at fault. Liability insurance is designed to cover these expenses; it also compensates injured parties and covers their medical care.

Minimum Liability

The state establishes the minimum liability amount so that you are forced to purchase enough coverage to comply with the Texas Financial Responsibility law. Minimum liability insurance provides coverage of up to $30,000 to cover medical costs of each injured person in the other driver's vehicle. The minimum liability policy pays no more than $60,000 per accident and up to $25,000 in property damage. This minimum basic coverage is referred to as 30/60/25.

Know too, that liability insurance doesn't cover medical care you may require, or any of the repair costs or replacement of your damaged or destroyed vehicle. The maximum amount that minimum liability insurance provides may not be enough to cover the expense of repairing or replacing another driver's car, or their incurred medical expenses. By limiting the amount of coverage you buy, you also risk being sued by other drivers and forced to pay out-of-pocket what your auto insurance policy doesn't cover.

Why You Need Proof-of-Insurance

  • You cannot renew or apply for a driver's license.

  • You cannot renew or apply for a new vehicle registration sticker.

  • You cannot get the state-required car inspection without showing your "proof-of-insurance" card.

  • You are also legally required to show your "proof-of-insurance" card anytime you have an accident, or when requested to do so by a police officer.

Fines For Violating Texas Financial Responsibility Laws

If you violate the state financial responsibility law by failing to have an auto insurance policy with at least the minimum liability insurance coverage, you will be subject to a range of penalties.

  • First Offense: The penalty for the first offense is a fine of between $175 and $350.

  • Additional Offenses: You may be forced to pay a fine of between $350 and $1,000.

  • The law allows the state to suspend your driver's license.

  • The state can impound your car.

Penalties for More Serious Offenses

For violating the state financial responsibility law and not having a driver's license, you may be fined as much as $2,000 and/or be sentenced to 6 months (180 days) in jail.

Penalties are even steeper if you cause an accident that results in serious injury or death. In that case, you could be fined up to $4,000 and/or sentenced to a year in jail.

Know What Your Auto Insurance Policy Covers

  • Named Driver - A named driver provision means that the auto insurance policy only extends coverage to drivers who are named on the policy.

  • Excluded Driver- Your policy may include an endorsement that excludes specific people from coverage.

  • Business Use - An auto insurance policy may have a provision that excludes coverage when you use your car for business purposes such as making deliveries. This means that you aren't covered for anything that happens while you are using the car for business purposes.

  • Racing - Another common limitation may extend to racing. This means that your insurance won't cover anything that happens to you or your car if you are involved in a racing activity.

  • Intentional Acts - This means that any damage that you (or others who are insured as drivers on your policy) incur because of intentional behavior is excluded from coverage.


This type of coverage satisfies the Texas Financial Responsibility Requirement. If you or any other driver on your policy inflicts damage to another vehicle or injure another person, this policy will provide coverage for up to the dollar amount limit specified in the policy. In addition to medical costs, it may also provide other drivers or passengers with compensation for lost wages and pain and suffering. It may also cover funeral expenses, if the accident results in death.

Liability insurance typically includes coverage to pay for the cost of repairing or replacing a car. It may also cover the cost of car rental while damaged car(s) are being repaired. Liability insurance also pays for any court-awarded punitive damages. Should you be arrested because of the accident, it also pays $250 towards a bail charge. If you were to be sued by the other driver, liability insurance will also cover the cost of your legal fees.

Collision Coverage

If you've purchased a car in recent years, your lender may have not allowed you to take possession of the car without first showing proof of both a comprehensive and collision auto insurance policy. Collision coverage pays for the cost of repairing or replacing your car. The maximum amount you receive from the insurance policy amounts to the car's current cash value, minus the amount of your deductible. A collision insurance policy provides coverage to protect authorized drivers, family members and passengers.

Comprehensive Coverage

This type of insurance policy covers damage or destruction to your car that is caused by fire, falling objects, hail, theft, vandalism, or anything other than a collision. If your car is stolen, you must file a police report in order to collect payment from your insurance policy. With a comprehensive insurance policy, your coverage will include the cost of a car rental or other transportation if someone steals your car. As with a collision insurance policy, your coverage will only pay for the actual cash value of the car - less the amount of your deductible.

Personal Injury Protection Coverage

An insurance agency must extend an offer of $2,500 in personal injury protection (PIP) to you when you purchase your policy. It will cover the cost of a caregiver for any injured person. It also pays 80 percent of an injured person's lost wages. Higher limits are available for an increase in the premium. If you decide you don't want to accept the PIP coverage, you must indicate your refusal in writing.

Uninsured Motorist/Underinsured Motorist Protection

If you are involved in a hit and run accident or an accident caused by a driver with either no insurance or very limited coverage, UM/UIM coverage pays for your expenses related to the accident. This type of policy extends coverage to personal property that was damaged during the accident. There is a mandatory $250 deductible for a UM/UIM insurance policy.

This type of insurance pays for bodily injury and property damage. There is no deductible for bodily injury with an uninsured/underinsured motorist insurance policy. It pays for medical expenses, pain and suffering, partial or permanent disability, disfigurement, and loss of wages due to injuries.

Property damage coverage with an uninsured/underinsured motorist policy is designed to reimburse you for the cost of car repairs, auto rental fees, and personal property damaged in an accident. This coverage extends to family members, authorized drivers, and passengers. As with personal injury protection, your insurance company is legally required to offer you UM/UIM coverage, and it may only be refused if done so in writing.

There is so much information to learn about Texas auto insurance that prospective consumers would be wise to go online to check out different carriers to compare coverage — with AmeriFirst Insurance we allow you to compare insurance quotes directly from our website. To get the most unbiased quotes and more thorough information, contact your local independent agency. If you're in Houston, Austin, Dallas, Fort Worth, or the surrounding DFW communities, AmeriFirst Insurance can help you get the most accurate insurance information, so you can decide on the best type of auto insurance policy for your needs.