Automobile Insurance Advice
Most of us who drive know we must have insurance on our automobiles, but not all of us know what this insurance does and does not cover. The following is a basic overview of the kinds of insurance commonly offered in Texas, what each different kind of insurance covers, and some basic points every automobile owner should consider.
Liability
The most important type of insurance is called liability insurance. Every driver is required by Texas state law to have a certain amount of liability insurance. The purpose of liability insurance is to pay for damages caused by you and other drivers of your automobile, including such things as medical bills, car repair bills, lost wages, compensation for pain and suffering, and most other kinds of damages that might be awarded. As of April 1, 2008, Texas law requires drivers to carry so-called “25/50/25″ insurance, which provides coverage of up to $25,000 per person, up to a total of $50,000 per accident, and up to $25,000 for property damage per accident.
PIP
Another common type of car insurance is personal injury protection insurance, or “PIP.” PIP pays the medical bills and lost wages incurred by someone who is injured while driving or riding in your car. PIP is available regardless of who is at fault for causing the accident. Although Texas drivers are not required by law to purchase PIP coverage, insurers are required to offer at least $2,500 in PIP coverage. If the driver chooses not to carry PIP, he or she must reject it in writing.
Uninsured/ Underinsured
A third common kind of insurance is uninsured/underinsured motorist (UM/UIM) coverage. Basically, UM/UIM coverage protects the insured against damages or injuries that are caused by other drivers who (in violation of the law) do not have liability insurance. As is the case with PIP, a driver is not required by state law to carry UM/UIM coverage, but insurers are required to offer it. Also, like PIP, if the driver chooses to reject the coverage, he or she must do so in writing.
Collision and Comprehensive
Liability, PIP, and UM/UIM are very common, and many drivers carry all three kinds, but those are not the only kinds of insurance available. For example, drivers may also choose to purchase collision insurance and comprehensive insurance. Collision insurance pays the costs of fixing your car after an accident, whether the accident was caused by you or by another driver, up to the market value of the car. Comprehensive insurance also pays for damage to your car, but it pays for damage by causes other than collision, such as damage by fire, hailstorm, or theft. Although neither collision nor comprehensive insurance is required by state law, banks and other lenders often require that a borrower buy this extra insurance in order to protect the value of the car.
Other Insurance
Other, even more specialized kinds of insurance may be available. For example, many insurers offer towing insurance, which pays the cost of towing your car to a garage if it is disabled. Others offer rental car reimbursement, which pays the cost of renting a car to use while your car is being repaired for damage covered by some other insurance policy.
How Much Is Enough?
The answer to the question of how much insurance a driver must have is usually an easy one. State law requires all drivers to have at least 25/50/25 in liability insurance coverage. However, the answer becomes more complicated when you reframe the question in terms of how much the driver has to lose.
We recommend that you have additional liability coverage to protect you if you cause an accident. We also urge you to purchase at least the minimum amount of UM/UIM coverage. If possible, have as much UM/UIM coverage as you have liability coverage. For a few dollars more, you can adequately protect yourself and your family. Talk to your insurance agent if you have questions about the coverages that you should carry on your auto insurance policy. And, as always, feel free to contact us if you have additional questions.