Auto insurance is an important investment, but finding a policy and insurer that suit your needs isn’t always easy. Here you’ll find everything you need to know about buying or modifying your Texas auto insurance policy — including how much coverage is required, what your policy will pay for and where to find the cheapest rates in Texas.
Car insurance in Texas at a glance
| Category | Insurer |
|---|---|
| Biggest auto insurance company | State Farm |
| Best for customer satisfaction | Texas Farm Bureau |
| Cheapest rate for good drivers | USAA, Geico, State Farm |
| Cheapest rate for young drivers | USAA, Geico, Farmers |
| Cheapest for drivers with an at-fault crash | USAA, State Farm, Farmers |
| Minimum auto insurance requirements | Liability insurance with 30/60/25 limits |
| % of Texans driving uninsured | 13% |
| Deadline to add a new car to your policy | 20 days |
In this article
- Minimum state car insurance requirements in Texas
- Other coverages to consider
- Largest auto insurance companies in Texas
- Companies with the cheapest car insurance in Texas
- Best-rated Texas auto insurance companies
- Alternatives to car insurance
- Adding a new car to your policy
- Car insurance when driving to Mexico
- Reasons your rate may change
- Reasons your policy may be canceled or not renewed
- Texas prompt payment law
- Car insurance for high-risk drivers
Minimum state car insurance requirements in Texas
Texas drivers are required to carry liability insurance. You’ll often see the minimum requirements written in shorthand as 30/60/25. This means in Texas you must buy at least:
- $30,000 bodily injury/death liability coverage per person.
- $60,000 bodily injury/death liability coverage per crash.
- $25,000 property damage liability coverage per crash.
If you ever cause a crash, liability insurance kicks in to pay for others’ injury treatment and property damage, up to your limits. It doesn’t pay for your own injuries or vehicle repairs.
Say you carry the minimum liability limits shown above and collide with another car full of passengers. Your policy would pay up to $30,000 in injury costs for each injured person, up to a maximum of $60,000 total for the entire crash. Your policy would also cover up to $25,000 total in property-damage costs for other parties.
In many cases, the bare minimum insurance won’t be enough. If you total someone’s luxury sports car, for example, their repair costs could easily exceed your $25,000 ceiling. Any damage that surpasses your limits has to come out of your own pocket. That’s why for most drivers it’s wise to select higher limits, such as 100/300/50, for better financial security and peace of mind.
» COMPARE: NerdWallet’s car insurance comparison tool
Other coverages to consider
Collision coverage: Whereas liability insurance pays for others’ vehicle damage if you cause a crash, collision coverage goes toward fixing your own ride. It also pays for repairs if you have a single-car accident, such as hitting a tree.
Collision includes a deductible, which is the amount your insurer subtracts from your claim payment. So if you need $5,000 worth of repairs and have a $500 deductible, your claim check would be $4,500. Most drivers choose a deductible between $500 to $1,000. The higher your deductible, the lower your rates will be, but you’ll have to pay more toward repairs after a crash.
Comprehensive coverage: Comprehensive coverage pays to repair your car after animal collisions and a list of non-collision issues such as car theft, vandalism and fire, to name a few. Like collision, comprehensive also comes with a deductible.
Uninsured/underinsured motorist coverage (UM/UIM): If you’re struck by a driver who has no car insurance, or not enough to cover your bills, UM/UIM coverage will pay for your injury treatment and that of your passengers, as well as your property damage. There is a mandatory $250 deductible for UM/UIM property-damage claims in Texas.
Texas auto insurance companies must offer UM/UIM coverage, but you can reject it in writing if you wish. Note that 13% of Texans drive uninsured — one of the 20 highest ratios in the country, according to the Insurance Research Council — so UM/UIM may be a worthwhile purchase. If you add this coverage, it’s common to select the same limits as your liability insurance.
Medical payments coverage (MedPay): MedPay helps pay for your injury treatment plus that of your passengers or family members no matter who caused the crash. It also helps cover funeral costs after fatal crashes.
Personal injury protection (PIP): Like MedPay, PIP pays for injury and funeral costs for you, your family and your passengers after a crash, regardless of who caused the accident. PIP also covers up to 80% of income you lose due to injuries, and the cost to hire a caregiver. Texas car insurance companies will automatically offer $2,500 in PIP, but you may reject it in writing if you don’t want it, or select higher limits.
The 10 largest auto insurance companies in Texas
| Rank | Insurer | Start comparing |
|---|---|---|
| Source: A.M. Best | ||
| 1 | State Farm |
|
| 2 | Allstate | |
| 3 | Geico |
|
| 4 | Farmers | |
| 5 | Progressive | |
| 6 | USAA Open to active military members, veterans and their families. |
|
| 7 | Home State Insurance |
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| 8 | Texas Farm Bureau | |
| 9 | Liberty Mutual |
|
| 10 | Nationwide | |
Companies with the cheapest car insurance in Texas
Cheapest for good drivers
For drivers with no at-fault accidents, DUIs or moving violations.
Price
- $1,207/year
Price
- $1,331/year
price
- $1,423/year
The average for good drivers among the three cheapest insurers was $1,320. While USAA notched a better price than its competitors, the company services only active military members, veterans and their immediate family. Geico and State Farm generally provide a larger offering of safety-oriented discounts. State Farm in particular has four separate discounts associated with violation- and accident-free driving.
Cheapest for young drivers
For drivers in their early 20s.
Price
- $771/year
price
- $894/year
price
- $1,115/year
Young drivers often have fewer coverage needs than those with families or extensive assets. As a result, they can get some of the cheapest car insurance in Texas. This category had the smallest range of average quotes of any we tested — only about $1,500 between lowest and highest — meaning young drivers can keep costs fairly low among a wide variety of insurers.
Cheapest for drivers with one at-fault accident
Price
- $1,654/year
price
- $1,671/year
price
- $2,040/year
Having even one at-fault accident can add a significant sum to your Texas car insurance premium. The lowest average rate for this category was roughly $400 higher than the lowest average for good drivers with clean records. Both USAA and Farmers offer an accident-forgiveness feature that may prevent your rates from spiking if you’ve gone years without incident but recently had an at-fault claim.
» COMPARE: NerdWallet’s car insurance comparison tool
Best Texas car insurance companies for customer satisfaction
| Company | Customer Satisfaction Rating (out of 1,000) |
|---|---|
| Source: J.D. Power | |
| 1. Texas Farm Bureau |
836 |
| 2. Allstate |
829 |
| 3. State Farm |
829 |
| 4. Farmers |
818 |
| 5. Progressive |
818 |
| 6. AAA |
813 |
| 7. Geico |
804 |
| 8. Liberty Mutual |
798 |
| 9. Nationwide |
791 |
| USAA Open only to active military members, veterans and their families. |
890 |
Alternatives to buying auto insurance in Texas
You don’t necessarily have to buy car insurance in Texas. There are legally acceptable alternatives you can choose to prove your financial responsibility, including:
- Filing a surety bond with the Department of Public Safety. You must file the bond jointly with at least two people, called “sureties,” who own property in the state. The property offered in the bond must be worth at least as much as the coverage provided under the state’s minimum liability car insurance requirements.
- Making a $55,000 deposit with the state comptroller, either in cash or securities.
- Making a $55,000 deposit with the county judge where your vehicle is registered, either in cash or cashier’s check.
- Qualifying for a certificate of self-insurance through the Department of Public Safety, under which you promise to pay up to the same amount covered by minimum liability insurance requirements if you cause a crash with one of your cars. Note that this option only applies if you own 25 vehicles or more.
The Texas Department of Insurance is in charge of making and enforcing insurance laws in the state, and below are many of its guidelines.
Adding a new car
If you buy a new car, it will automatically be covered by your policy in Texas for up to 20 days. If you have an accident during that time, your insurer will provide the same amount of coverage for your new vehicle that you have on your most heavily insured current vehicle.
For example, if you have two cars, one with only liability insurance and one with liability plus collision and comprehensive, your new vehicle would also get liability, collision and comprehensive. If you trade in a car for a replacement, however, the new car will receive the same coverage as the one it replaced.
After the 20 days, you risk having no coverage in the event of a crash, so it’s important to notify your Texas car insurance company of any new cars before then. Once you let your insurer know, you can officially add the new vehicle to your policy and select how much coverage you want for it.
Insurance if you’re driving to Mexico
Your Texas auto insurance likely won’t apply if you cross the border into Mexico, meaning you’d be on the hook for damages if you crash your car while visiting.
Here are your options for making sure you have coverage in Mexico.
- Request a change to your current policy. Some Texas auto insurance companies provide a free endorsement, essentially a coverage alteration, for your policy that includes occasional trips of up to 10 days and up to 25 miles into Mexico. You may be able to buy coverage for longer than 10 days at an extra cost, but you would likely still be limited to within 25 miles of the border. Make sure to talk the issue over with your insurer or agent and confirm that any endorsement you add meets Mexican minimum insurance requirements.
- Buy Mexican liability insurance. Ask your current insurer, or search online, for names of companies licensed in Texas that sell Mexican auto insurance. There you can buy Mexican liability insurance that meets the country’s legal requirements.
- Buy Mexican liability insurance and a tourist endorsement. Ask your insurer about buying a Mexico tourist endorsement in addition to Mexican liability insurance. This endorsement will give you extra liability coverage to pay costs that are above the limits of a Mexican liability policy. It will cover any distance or time length of trip.
Texas auto insurance rate increases
While things like moving to a new ZIP code or making changes to your policy can affect what you pay, the sharpest insurance rate increases tend to happen after driving violations or crashes.
Car insurance companies in Texas may add surcharges to your premium for the following reasons:
- Accidents (the more accidents, or the greater the severity, the higher the possible surcharge).
- Tickets for moving violations such as speeding.
- DUI.
- Driving without a license or with a suspended license.
- Involuntary manslaughter.
- Criminally negligent driving. This essentially means operating your car with no regard for others’ safety. Weaving in and out of traffic, running lights and drag-racing are a few common examples.
Reasons your Texas policy may be canceled or not renewed
Why your policy could be canceled
If you’re in the middle of a policy term, your policy generally cannot be canceled as long as your plan has been in effect for at least 60 days. The only reasons an insurance company in Texas may cancel your policy (if it’s at least 60 days old) are:
- You don’t pay your car insurance bill.
- You file a fraudulent claim.
- Your driver’s license or car registration are suspended or revoked. (This extends to other drivers who live with you or drive your car.)
Before the 60-day mark, your insurer can cancel your policy for any lawful reason — for instance, if you get a DUI conviction.
If you paid your entire policy bill upfront, your insurer must reimburse you for the amount of coverage remaining when it cancels.
Why your policy could not be renewed
Once your policy term expires, either you or your insurer have the option of not renewing the plan, in which case you would no longer have coverage through that company. However, your insurer may choose not to renew only under certain circumstances.
A company can’t refuse to renew your policy unless it has been in effect for at least 12 months. This means if you’re coming to the end of a six-month policy, your insurer must renew for at least another six months. The insurer must give you at least 30 days’ notice before it refuses to renew your car insurance policy.
In Texas, insurers can’t use these reasons to nonrenew your policy:
- Weather-related claims such as damage from floods, winds and hail.
- Damage from animals or bird collisions.
- Damage from gravel and other flying and falling objects, but if you have three of these claims in 36 months your insurer can raise your deductible.
- Claims for towing and labor, but if you have four of these claims in 36 months your insurer can nonrenew your towing coverage.
- Other claims or accidents aren’t your fault, unless you have more than one in 12 months.
The Texas prompt payment law
Many states, including Texas, enforce prompt payment laws to make sure insurers respond to customer claims in a fair and timely manner.
If you file a claim in Texas, your insurance company must:
- Respond within 15 business days after it receives your claim in writing. You will likely be asked to document your loss.
- Accept or reject your claim within 15 business days of receiving any additional documents it asked for.
- Send your check or bank draft within five business days after it agrees to pay your claim.
If your insurer can’t keep these deadlines, it must write to you explaining the reason for any delay. The company must then approve or reject your claim within the next 45 business days.
If your insurer denies your claim, it must explain why in writing. It may say that your policy doesn’t cover the issue in question. If that’s the case, ask your representatives to highlight the section in your policy on which they based the decision. If the language in your policy is unclear and you can reasonably interpret it in your favor, a court will usually order the company to pay the claim.
Texas’ prompt payment law doesn’t apply if you’re seeking a settlement from another driver’s insurance company — for instance, if that driver crashed into you and caused the damage. However, the other driver’s company must still “act in good faith and … make a prompt and fair settlement,” according to the Texas Department of Insurance.
The Texas auto insurance high-risk pool
High-risk drivers who are unable to get car insurance on the open market — due to DUIs, at-fault crashes or other factors — can seek coverage through the Texas Automobile Insurance Plan Association. TAIPA coverage is available only to those who are refused a policy by at least two insurance companies. It’s also more limited and more expensive than traditional coverage.
Check out NerdWallet’s car insurance comparison tool for help securing Texas car insurance at the most competitive price.
Alex Glenn is a staff writer at NerdWallet, a personal finance website. Email: aglenn@nerdwallet.com.
This post was updated Aug. 1, 2016. It was originally published Feb. 17, 2016.
METHODOLOGY
To test rates for good drivers and drivers with an at-fault crash, NerdWallet averaged rates from the largest insurers for 30-year-old men and women in 10 ZIP codes and with 100/300/50 liability insurance limits, 100/300 uninsured motorist coverage, and collision and comprehensive coverage with a $1,000 deductible. Our sample young driver was 22 and carried the minimum coverage required. We used a 2012 Toyota Camry in all cases. These are sample rates generated through Quadrant Information Services. Your own rates will be different.
from NerdWallet
https://www.nerdwallet.com/blog/insurance/cheapest-car-insurance-in-texas-tx/
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