Texas Auto Insurance Guide – Important Policy Coverages etc

Do you know the incredible benefits of having automobile insurance? It provides you great financial protection. It safeguards you financially by paying another driver’s car repair and medical expenditures if you caused the accident. Considering the type of coverage you possess, it can compensate for your car repair or replacement costs as well.

Do you need auto insurance?

If you live in Texas, state law requires drivers show proof that they can compensate for the accidents they cause. So, if you are a driver, you are required to have auto liability insurance.

What are the types of auto Insurance coverages?

So, when you talk about auto insurance coverages, there are eight basic types to choose from:

  1. Liability Coverage

This coverage pays for the damage caused to another person’s car or property. It also includes drivers’ and passenger’s medical charges and other expenses. According to the law in Texas you need to have at least $30,000 coverage for damage per person, up to $60,000 for every encounter, and $25,000 compensation for property damage.

  1. Collision Coverage

Collision coverage is required to repair or replace your vehicle after an accident.

  1. Comprehensive Coverage

Comprehensive coverage compensates you when your vehicle is damaged by other events besides a car accident. For example, this type of coverage could cover hail damage from a storm, theft, a break-in, among other things.

  1. Medical Payment Coverage

Medical payment covers you or your passengers’ medical expenses in case you are injured in a car accident, whether you caused it or not.

  1. Personal Injury Protection (PIP)

Like the medical payment coverage, personal injury protection covers for your and other passengers’ medical expenses. Furthermore, it provides compensation for lost wages or other non-medical expenses.

  1. Uninsured Motorist Coverage

This coverage will protect you in case you have an accident with a driver without insurance or who does not carry enough liability to compensate for your medical expenses and vehicle repairs This type of coverage will also be helpful in a hit-and-run situation.

  1. Towing and Labor Coverage

This is an optional coverage you can add to your policy. It will cover for the costs of your car being towed if it cannot be driven. It also pays for the expenses required to replace a punctured tire, deliver gas/oil, or kick-start your car battery.

  1. Rental Reimbursement Coverage

This coverage compensates for the price of renting a car if yours is under repair after an accident. Some companies will also reimburse expenses for taxi services.

Who is covered?

Most auto insurance policies cover you, your family, and anyone driving your car. But it is always better to review your auto insurance policy to know exactly who is covered.

What does your policy compensate?

Auto insurance coverage differs by policy depending on the type of coverage you opt for. You can always talk to your insurance agent to help you find the best coverage options according to your needs.

Most policies cover: Most policies do not cover:
Damage caused to your vehicle as a result of fire, vandalism, natural disaster, animal encounter, etc. Accidents that occur while driving for a ride-hailing or delivery service
Accidents that happen when you or someone insured in your policy is driving a rental vehicle Accidents that occur when you drive a car in other states
Lawyer fees if you are sued in a car accident Accidents that occur while you are driving in Mexico
Vehicle repairs, lost wages, medical expenses, funeral costs for drivers or passengers Equipment that is not permanently fixed in your car

 

If you purchase a new vehicle, is it covered?

If you have recently purchased a new car, your existing auto insurance will automatically cover it for 20 days. However, the type of coverage will depend on whether the vehicle is a supplementary or replacement vehicle. So, when you purchase a new vehicle, you should know the following facts:

  • An extra vehicle enjoys the same coverage as the car that has the greatest coverage of your policy
  • A spare car enjoys the same coverage as the vehicle

You should always inform your insurance agent about your new auto to avoid any lapse in coverage.

Am I covered if I am driving a borrowed car?

If you are involved in an accident while driving a borrowed car, the car owner’s insurance policy would cover for the damage or expenses. However, if the owner does not possess insurance or does not have enough funds to pay for the damages, your policy might cover for it.

If you don’t possess a vehicle and borrow one for driving, a non-owner liability policy is the best option for you. It will cover you for any injuries and/or damages you cause to other individuals while driving the borrowed car. So, whether you borrow the car from the repair shop, the liability insurance will cover for the car damages and even pay for the medical expenses of people hit in the accident.

What are deductibles?

Deductibles are the amount of money you must pay before your insurance company pays a claim. You are required to pay deductibles for coverages such as comprehensive and collision. The deductibles amount may vary depending on your preference, they will also impact the premium of your policy.

What is the auto insurance for young drivers?

You have two choices to cover your underage drivers: you can either include them in your policy or purchase a new policy for them. However, including them in your policy is generally a more affordable option.

Many companies demand you to include everyone living with you (who has reached driving age) in your auto insurance policy. So, whenever young people in your home start driving, you should immediately inform your company or insurance agent. Otherwise, you will have to pay an extra premium.

The company might also reject any claims you have or disallow policy renewal. If a teenager is the main driver of a vehicle, your insurance company will determine premiums accordingly. If this is not the case, the company will determine teen’s premium on the car with the highest rate.

Children not living with you.

A few insurance companies ask you to include young drivers in your policy, even if they don’t live with you. So, you should mention all your kids (whether they live with you or not).

Also, if your child owns a car, the insurance company might charge you differently as the rates are based on where the car is generally located. However, if your child does not own a car, chances are that the insurance company might offer you a discounted premium. Also, if your child attends school in other states, you must check with the state laws to ensure that you have sufficient coverage.

How to understand insurance premiums?

Texas law requires insurance establishments to charge reasonable and fair rates that are suitable for the risks they cover. Premiums will vary depending on many factors. The state authority does not pre-approve rates, however, if any insurance company’s rates are too high, they are forced to refund the extra amount to the policyholders.

How do insurance companies determine what to charge?

Insurance corporates use an underwriting process to determine whether to sell you an insurance plan and what amount to charge. Most companies consider the following aspects when determining the car insurance premiums:

  • Driving record
  • Claims history
  • Location where you keep the vehicle
  • The vehicle’s make, model, and year
  • Vehicle usage
  • Credit score

When you apply for an auto insurance policy many companies use the Comprehensive Loss Underwriting Exchange (CLUE) to inquire about your claims history. This information will be considered while calculating the policy rate.

What are your rights?

An insurance company cannot:

  • Reject you or charge you a higher rate based on your race, religion, origin, age, marital status, disability, etc.
  • Reject you, charge you higher or discriminate against you compared to other individuals in your rate or risk category.
  • Refuse you or charge you higher due to your credit score

Can insurance companies deny coverage or claims?

There are some reasons why an insurance company can deny coverage or reject renewing your existing policy. Some reasons are:

  • Non-payment of premiums
  • You committed fraud or provided false information during the application process
  • You did not provide required documentation on time
  • You are listed as an excluded driver
  • You have made a fraudulent claim

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Freedom Insurance Group
3861 Long Prairie Rd Ste 110
Flower Mound, TX 75028
Phone: (972) 798-3769

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