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Is Texas a “No Fault” Insurance State?



Is Texas a no-fault state? The answer is no: Texas uses “fault” or tort laws and follows its own set of unique insurance requirements. These laws are recorded as part of the Texas Transportation Code.

Why is it important to understand Texas car insurance law? In the event of an accident, knowing the basic parameters of auto insurance will help you understand what course of action to take. This knowledge can protect you from potentially expensive mistakes.

It's also important to understand minimum requirements (to be sure you're in compliance). In the following article, we'll break these topics down in detail, including specific discussion of….

Texas Fault Laws: The Basics
What Are Minimum Car Insurance Requirements In Texas?
Do you Need Uninsured Motorist Coverage in Texas?

Let's get started….

Texas Fault Laws: The Basics

The phrase “fault state” might sound scary, but there is no need to worry. The “fault” has less to do with court cases/claims and more to do with the responsibility of an insurance company.

Like the majority of states, Texas uses a fault-based system of personal injury recovery and auto insurance. What does this mean for your claim?

It means that according to Texas regulations you are responsible for paying for an accident that can be proved was caused by you. It also means that there are more third party claims when compared to the first party norm that applies to no-fault insurance.

A few definitions to clarify:

  • A first party claim: Type of insurance policy under which an insured (the first party) is paid by his or her insurer (the second party) in the event of an accident, injury [1].

  • A third party claim: A type of liability insurance policy purchased by an insured (the first party) from an insurer (the second party) for protection against the claims of another (the third) party [2].

In Texas, the victim of a car crash can file a personal injury lawsuit against an at-fault without the restriction faced in a no-fault state. In doing so they can be compensated for property damage, injuries, lost wages, pain and suffering, and sometimes even punitive damages.

What Are Minimum Car Insurance Requirements In Texas?

Every state, including Texas, has a slightly different standard when it comes to basic insurance requirements. If you plan to drive legally in the state you'll need to have the following coverages:

  • Bodily Injury Liability: $30,000 per person/$60,000 per accident -- Bodily Injury liability covers expenses related to the injury or death of another driver or a pedestrian in an accident where you're at fault.
  • Property Damage Liability: $25,000 -- When you're at fault, property damage liability is there to cover damage you might have caused to another vehicle or someone's personal property.

In Texas, this is referred to as 30/60/25 coverage.

It's also important to note that these are minimum requirements. You can (and should) carry higher insurance limits to help protect against a more expensive accident -- extra high bills may exhaust policy limits.

Additionally, a few other types of coverage you may want to consider are:

  1. Full collision coverage
  2. A comprehensive or umbrella policy
  3. Towing and labor insurance

When you buy an insurance policy your insurance carrier is going to send you an insurance card. You must present this card in the following scenarios:

  • When you have an accident
  • When requested by a police officer
  • When you register your vehicle
  • When you renew your driver's license
  • When you run your car through emissions testing

Do you Need Uninsured Motorist Coverage in Texas?

Uninsured or underinsured motorist coverage (UIM) is a policy aimed at covering you in the event someone hits you without insurance. It also applies if their insurance is insufficient to cover the damages.

In Texas, there is no requirement that says you must purchase UIM coverage. However, the law does require that insurance companies offer this kind of coverage and consumers are encouraged to have it is a safeguard.

All UIM coverage is subject to a $250 deductible (or higher), which you must pay off before the insurance company starts picking up the tab.

Summary

Answering a question like “is Texas a no-fault state?” is easy. Fully understanding Texas car insurance law is a little more complicated. The best thing to do is keep some basics in mind and if anything happens talk to an insurance agent or a licensed attorney.

  • Texas is not a no-fault state. Along with 12 other states, it follows fault rules, and as such, you should be prepared to bear responsibility for any accident you cause.
  • Texas follows something called the 30/60/25 coverage guideline. This essentially means that you must have bodily injury liability coverage at limits of $30k per person/ $60k per accident, and property damage liability coverage at $25k.
  • UIM coverage is not required under Texas law. Insurance companies are required to offer it though, and in many cases, it's smart to have this extra layer of protection.

If you'd like to read the fine print, the Texas Department of Insurance has published this comprehensive guide which digs into some of the more obscure details.



Sources:

1 - Business Dictionary
2 - Business Dictionary
3 - Texas Transportation Code


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