Auto Insurance
16 min read

Car Insurance In Texas: Your Guide To Everything You Need To Know

Published on
June 28, 2022

Are you curious about the car insurance requirements in Texas? Car insurance protects you financially if you cause a car accident, and depending on your coverage, it can pay for repairs or replace your car if it is damaged or stolen. Car insurance can be complicated, but in this article, we’ll make it simple. Keep on reading to learn everything you need to know about car insurance in Texas.

In this article we'll cover (you can click on any of the items below and you'll jump to that section):

  1. Do You Need Car Insurance in Texas?
  2. The Types of Car Insurance Coverages
  3. Who Is Covered Under Your Insurance
  4. Am I Covered if I'm Driving Someone Else's Car in Texas?
  5. Texas Car Insurance for Young Drivers
  6. Car Insurance Claim Tips
  7. Other Frequently Asked Questions

Do You Need Car Insurance in Texas?

Texas law requires drivers to show they have coverage for the accidents they cause. So, do you need car insurance in Texas? Yes.

Texas auto insurance requirements include that you must carry an auto liability policy to pay for damages and medical expenses for others if you are at fault in an accident. And if you still owe money on your car loan, your lender will require you to also carry collision and comprehensive coverage.

The Types of Texas Car Insurance Coverage

There are different types of coverages available through Texas car insurance policies. Let’s take a look at them.

Liability Coverage

Liability coverage pays to repair the other driver’s car if you are the one who caused the accident. This coverage also pays for expenses if the driver or their passenger needs medical attention for injuries from the accident. You may be asking, “What is the minimum car insurance required in Texas?”

Texas car insurance requirements state that you must have at least $30,000 of coverage to cover injuries per person up to $60,000 per accident. Additionally, you must carry $25,000 to cover property damage. This is often referred to as 30/60/25 coverage.

If you were to be in a multi-car accident or cause another vehicle to be totaled, this coverage may not be enough. You should also consider higher liability limits.

Collision Coverage

This type of coverage is pretty straightforward. Collision coverage pays for repairs or replacements for your car if you are in an accident.

Comprehensive Coverage

This coverage is for damage to your vehicle caused by fire, flood, vandalism, or anything other than a collision, or if it is stolen.

Medical Payments

Medial payments coverage will pay medical bills for you or passengers in your car, and it will also cover you if you are hurt while riding in someone else’s car or while walking or biking.

Personal Injury Protection (PIP)

PIP coverage is available to help pay for you or your passenger’s medical bills, but it also helps pay for lost wages and other non-medical costs related to an accident. PIP is one of the most important Texas car insurance requirements, and you must notify your car insurance company in writing if you do not want the coverage.

Uninsured/Underinsured Motorist

If you are hit by a driver that does not have insurance or doesn’t have enough coverage to pay for your car repair or medical bills, your uninsured/underinsured motorist coverage will take care of your expenses. It also pays if you are in a hit-and-run accident and the other driver is not identified. And just like with PIP coverage,if you do not want this coverage you must notify your car insurance company in writing.

Towing and Labor

Texas car insurance policies usually offer towing and labor coverage. This pays if your car can’t be driven and needs to be towed, or for the labor to change a flat tire or jump-start your battery.

Rental Reimbursement

If your car is stolen or needs to be repaired after an accident, this coverage will pay for a rental car. Some policies will also cover the cost of taxis or other ride-hailing services.

Who Is Covered Under My Car Insurance?

Your car insurance will cover you, your family, and anyone driving your car with permission in the event of an accident. Your policy will state if anyone is excluded from your coverage, so it is important to read it carefully or ask your agent if you and your loved ones are properly insured. If you need help, here's a handy guide on how to prepare to talk to a car insurance agent

What Does My Texas Car Insurance Policy Cover?

Now that you know the answer to “What is the minimum car insurance required in Texas?” Yet, you may have other questions about what else is covered.

Your coverage depends on your individual policy and the optional coverages you choose. However, there are some basic things that most policies do and do not cover.

Things That Are Usually Covered

  • Damage to your car from fire, hail, theft, flood, flying gravel or hitting an animal (if you carry comprehensive coverage
  • Accidents occurring while you or someone covered by your policy is driving a rental car
  • Accidents that happen while you’re driving in other states and Canada
  • Attorney fees if you are sued because of an accident you cause
  • Car repair, lost wages, and medical and funeral bills to the other driver and passengers if you cause an accident

Things That Usually Are Not Covered

  • Accidents that happen while you’re driving for a ride-hailing service or as a delivery driver
  • Accidents that happen while you’re driving a car that doesn’t belong to you but you could use regularly, like a company-owned car
  • Equipment not permanently installed in your car like a removable GPS or stereo system
  • Accidents that happen while you’re driving in Mexico, driving for business, or racing
  • Damages you cause intentionally

a lady buying a new car

If I Buy a New Car in Texas, Is It Covered?

If you buy a new car, Texas car insurance requirements mention that the new car will automatically be covered for about 20 days. The type of coverage depends on if the car is an additional or replacement car.

If you buy an additional car, it will have the same coverage as the car with the most coverage on your policy. If it is a replacement car, it will automatically have the same coverage as the car it is replacing. Be sure to notify your insurance carrier of your new car as soon as possible to avoid any expiration of your coverage.

Am I Covered if I'm Driving Someone Else's Car in Texas?

Your coverage depends on who owns the car you are driving. Make sure you know if the car is insured before you decide on borrowing the car.

Rental Cars

If you rent a car, your own auto policy will cover you while you are driving it for personal use. Keep in mind though, If you are driving the rental car for work, your policy will likely not cover you.

Most rental car agencies offer damage waivers and liability policies if you need the coverage. Before renting a car, check with your car insurance agent to see if you have the right coverages.

Borrowed Cars

If you are driving a car that you have borrowed and you cause an accident, the car owner’s insurance policy will cover the claims. If the owner doesn’t have insurance or doesn’t have enough to pay for all of the damages or injuries you’ve caused, your insurance will pay the claims.

If you do not own a car but often borrow one from your friends or family, you can purchase a non-owners policy to cover your liability when driving a borrowed car. It will not pay for your injuries or damage to the car you are driving.

How Much Is My Deductible? Do I Have Dollar Limits?

For claims on collision, comprehensive, and uninsured/underinsured motorist coverages, you will have to pay a deductible. A deductible is the amount of a claim you must pay yourself.

As an example, if you have a collision claim for $2,500 and your deductible is $500, you will receive $2,000 to pay for your repairs. For car insurance in Texas, you do not have to pay a deductible on claims against another driver’s car insurance company.

Texas car insurance requirements outline that some coverages will have a dollar limit or a maximum amount an insurance company will pay, even if the cost exceeds that amount. These coverages are usually liability, PIP, uninsured/underinsured motorists, towing and labor, and rental coverage.

Texas Car Insurance for Young Drivers

If you have car insurance in Texas, you have a few options for covering young drivers. You can add them to your policy or you can purchase a separate policy for them. Adding them to your policy is usually the cheaper option.

Many companies require you to add every driver residing in your household on your policy. When anyone in your family begins to drive or turns 16, it is important to notify your carrier right away. If they find out later through an audit, they can bill you for the extra premium you should have paid and they could deny any claims you have or even choose to non-renew your policy.

With regards to premiums, the car insurance company you choose will base the rate off the car, which is mainly driven by the teenager. Otherwise, the cost will be calculated by the car in the family with the highest rates. If you have a child on your policy who is away at school, be sure to let your carrier know where they are and if they have a car with them to make sure you have the proper coverages and premiums.

a lady checking her car insurance premiums

Understanding Texas Car Insurance Premiums

The state law says premiums for car insurance in Texas must be charged in a way that is fair, reasonable, and appropriate for the risks that they cover. Insurance companies use a process called underwriting to decide whether to sell you a policy and how much they should charge you.

Your company will consider several things when setting your car insurance premium.

Driving Record and Claims History

If you have accidents or a lot of traffic tickets on your record, your premiums will be higher, and some companies might refuse to sell you a policy.

Garage Location

The location where you keep your car will affect your premiums. Rates are higher for those who live in cities because accidents and theft are more common than in rural areas. There can also be a difference in premiums between zip codes in the same city.

Type of Car

If you have a luxury or sports car, you’ll pay higher rates because these vehicles cost more to repair.

Car Use

If you drive your car to or from work or use it for business, your rates will be higher.

Credit Score

Most companies use credit scores as a factor in setting premiums. Although there are new car insurance companies that don’t use credit score when setting premiums.

Car Insurance Cancellations and Non-Renewals

Sometimes, an insurance carrier may cancel or non-renew your policy. Let’s look at what that means.


A cancellation can occur when either you or the insurance company stops the coverage before the policy’s end date. A company must give you a ten day notice before it cancels your policy. Your carrier can cancel the policy at any time within the first 60 days for any reason unless the cancellation violates a law.

Cancellation can occur at any time if you stop paying your premiums, you file a fraudulent claim, or your license or registration is suspended or revoked. Regardless of who initiates the cancellation, you must be refunded any unearned premium that you’ve paid in advance.


A non-renewal happens when a company decides not to extend your coverage when your policy expires. When this happens, you must be notified in writing 30 days prior to the policy expiration.

Your policy must be in place for 12 months before a company can opt to non-renew coverage. A company usually elects to non-renew a policy if there are too many claims filed in a certain time frame.

What to Do if Your Car Insurance Policy Is Canceled or Non-Renewed

As soon as you get a non-renewal or cancellation notice, start shopping for a new car insurance policy right away. If you do not get a new policy in place before the old policy ends, you will have a lapse in coverage that could leave you vulnerable.

If you still owe money on your car, your lender will require you to keep coverage as a condition of your loan. If they are notified you are without coverage, they will place an expensive single-interest coverage and add the cost into your loan payment.

If you are having a hard time finding a new policy because of your history, you can get basic coverage through a high-risk carrier. Your premiums will likely be higher, and the coverage will be lower. However, with improved driving records and no claims activity, the premiums will go down and you will eventually qualify for a traditional policy again.

a family filing a car insurance claim

Texas Car Insurance Claim Tips

If you are in an accident or need to file a claim on your car insurance in Texas, here are some tips to help you.

Notify the Police

It is always a good idea to notify the local police of an accident, but it is essential that youcall the police if anyone is injured or you are hit by a driver who left the scene. Your policy will only cover hit-and-run accidents if you file a police report.

Gather All Accident Information

Make note of the exact time, date, and location of your accident. If there are any special circumstances like weather or road conditions, note that, too. And if you can, also take pictures of the scene.

If there is another driver in the accident, get their name, address, phone number, and license plate number. You will also need their insurance information, so either take a picture of their ID card or copy down the policy number, company name, and phone number.

If the driver refuses to share their information, call the police. You should also share your information with the other driver.

If there are any witnesses at the accident, get their names, addresses, and telephone numbers. Their accounts will help the insurance company determine who is at fault if there is a disagreement between the two drivers.

Notify Your Car Insurance Company

You should notify your insurance company right away if you are in an accident. Most companies will have a deadline for claim reporting for it to be covered. Your insurance card should have a number to call and report claims. Give a thorough account of what happened and answer any questions they might have.

If you’ve taken any photos or have the police report, you should send those to your insurance company right away. If you were injured in the accident, be sure to report that when you file your claim, then forward on any medical reports or bills you receive in the coming days.

What Happens After You File a Claim

Texas auto insurance requirements set deadlines for insurance companies to act after you file a claim. Within 15 days, your company must acknowledge it has received your claim and may ask to sign a proof-of-loss form or take a medical exam.

After the claim is filed, an insurance adjuster will want to look at your car’s damage to estimate the cost of repairs. The company will use this estimate as a basis for its payment to you. You may be asked to obtain a few estimates from an auto body shop to ensure accurate payments.

Once your insurance company has all the information they have requested from you, they have 15 business days to accept or reject the claim. They can take an additional 45 days to evaluate the claim if they notify you in writing of the reason for the delay. If they deny your claim, they must also notify you in writing.

If the company accepts the claim and agrees to pay, they must send you payment within five business days. This prompt payment law does not apply if your claim is being paid by another driver’s insurance company, but they must act in good faith to try to settle your claim quickly and fairly.

Settling Texas Car Insurance Claims

If you’ve made a claim on your car insurance in Texas, here is some information on how it might be settled.

Repair Claims

If your car needs repairs or it needs to be replaced, your insurance company will only pay up to the actual cash value of your car. Actual cash value is the cost to replace your car minus the depreciation, or the decrease in value because of regular wear and tear and ageing.

For repairs, the company is only required to pay for parts that are similar in type and quality of those that were damaged. They are not obligated to pay for original parts from the manufacturer.

Claim Denials

If you believe the other driver is at fault but their insurance company will not pay the claim, you can file a claim with your own insurance company if you have collision coverage. Your insurance company will then try to collect the payment from the other insurance company. You will still have to pay your deductible if you take this approach.

Underinsured Motorist Claims

If the other driver’s policy limits are not high enough to cover your repairs, you can file a claim with your company under your collision or uninsured/underinsured motorist coverage to pay the difference. Your deductible will apply.

If you have excess medical bills that are not covered by the other driver’s policy, you can file a claim with your Texas car insurance policy or your health insurance carrier. Your auto insurance will pay the claim under your PIP or medical payments coverage to pay the difference, minus your deductible.

Totaled Vehicles

If the cost to repair your damaged car is close to or exceeds its current value, the company will likely decide to total it. This means you will be paid to replace the car rather than have it fixed. You will be paid the car’s value minus depreciation.

For example, if your car is ten years old you will be paid the value of a ten-year-old used car, not the cost to replace the vehicle with a new car of the same make and model.

If you still owe money for a car loan, the amount the car insurance company pays you if it totals your car may not be enough to pay off your loan. This can occur if the market value of your car is less than what you still owe. When you purchase a new car, you can usually purchase gap insurance to cover this difference.

Now You’re Ready To Find The Right Car Insurance

Texas car insurance requirements are meant to protect all drivers and passengers on the road. LOOP can help you find the right policy to meet these requirements and you never have to worry about credit checks!

Applying is easy and our policies are always fair. Get a quote today to get started!

Texas Car Insurance FAQs

Do I need car insurance in Texas?

Yes, if you are a licensed driver and own or regularly borrow a car, you need to have car insurance.

What happens if I get in an accident and don’t have car insurance in Texas?

You will likely receive a ticket and your vehicle may be impounded until you can show proof of insurance to retrieve it. You are also at risk of having your license suspended and you may be responsible for paying administrative costs related to your case. When you do get insurance, it will likely be more expensive.

Can someone drive my car if they are not on my car insurance in Texas?

Texas car insurance requirements say that a policy will cover anyone driving your car with your permission. If you allow the person to borrow your car, they will be covered.

Will my Texas car insurance drop me if I get in an accident?

Your carrier may choose to cancel or non-renew your policy if it is done so within the legal requirements. Excessive claims activity and your driving record are often a cause of non-renewal.

What is the minimum car insurance required in Texas?

30/60/25 is the minimum liability coverage. If you have a car loan payment, there will be other requirements from your lender.

What is the average cost of car insurance in Texas?

It depends. Premiums can vary from person to person and carrier to carrier. Premiums are set using several rating factors.

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