How Texas Car Accident Insurance Works

Having car insurance might seem like an inconvenience, but it’s one of the most important things a person can have to protect themselves financially after a car accident. Car insurance helps people recover for their losses and shields a person’s finances from the inflated expenses of a car accident.

However, while everyone should have insurance, they should also be aware when filing a claim that the insurance company is not always looking out for their best interests. The system isn’t perfect, and car insurance companies are always looking for ways to fulfill their legal obligations while spending as little as possible. As a policyholder, one of the best things you can do to protect yourself is to understand how car insurance works in Texas (or whatever state you live in).

This guide is designed to help you learn more about what type of coverage might be the right insurance coverage for you, as well as understand the laws insurers must follow in Texas. Having this knowledge can help protect you from being treated wrong during the claim process.

Is Texas a Fault or No-Fault Car Insurance State?

Often, drivers are curious whether Texas is a fault or no-fault car insurance state. Some states have what is called “no-fault” car accident laws. These states require drivers to seek compensation from their own insurance policies, regardless of who is at fault for the accident. While this has some benefits—it lets people recover compensation for certain accident-related expenses, like medical bills, without having to prove that someone else was to blame—it also has its limitations.

In Texas, drivers enjoy the benefits of a fault-based insurance system. Under this system, you can seek compensation from the at-fault driver’s insurance provider, allowing you to avoid having to use your own insurance after a collision for which you were not at fault.

Depending on the type of insurance you have, as well as the circumstances of the accident, you may also be entitled to compensation via your own auto insurance policy. For example, if you have uninsured or underinsured (UM/UIM) coverage and are injured in a hit-and-run, you can use this coverage to help offset costs related to the crash.

What Are the Minimum Liability Requirements in Texas?

In Texas, everyone who drives a motor vehicle must carry minimum liability insurance. This is the minimum amount of coverage, and it covers your liability in an accident. Texas car insurance law also mandates how much coverage a person must carry.

A driver needs at least the following amounts of liability coverage in Texas:

• $30,000 in bodily injury coverage per person
• $60,000 in bodily injury coverage per accident
• $25,000 in property damage coverage per accident

These requirements are commonly referred to as the 30/60/25 rule.

Keep in mind that minimum liability coverage is often not enough to cover accident-related expenses. If you are injured in a collision with someone who only has the minimum amount of liability coverage, the $30,000 in bodily injury coverage may be far less than the cost of your medical expenses, lost wages, and other damages. When this is the case, other forms of compensation—such as holding the at-fault driver personally liable via a personal injury claim—may need to be pursued.

What Is an Auto Insurance Company’s Responsibility After an Accident?

When a person has paid insurance premiums for years, it’s reasonable for them to expect their insurance company to be there for them when needed. However, since insurance companies work to preserve profits, they don’t always act in the interest of the people they’re supposed to help.

When an insurance company fails to provide the service they’re supposed to claimants, they might be committing something known as “bad faith.” This is illegal. Essentially, bad faith occurs when an insurance company is unfair or doesn’t respond to a claim.

Texas requires car insurances companies to:

• Respond to a claim within 15 days
• Commence an investigation into a claim
• Gather all relevant information with the claim needed to investigate it

When a company isn’t being fair, is taking too long, or is ignoring a claim, it might be using a tactic designed to frustrate a claimant into accepting a low settlement once one is finally offered. If you suspect this is happening, it’s important to get in contact with a Texas bad faith insurance lawyer.

Texas Car Accident Insurance FAQ

Is Texas a No-Fault State When It Comes to Car Insurance?

No, Texas is not a no-fault state. It operates under a "fault" system, meaning that the person responsible for causing the accident is also responsible for paying for the resulting damages.

In most cases, this means that the at-fault person’s insurance company is the one responsible for paying the victims’ damages, but it may also be possible to hold the at-fault party personally liable.

What Is Uninsured/Underinsured Motorist Coverage, and Do I Need It in Texas?

Uninsured/underinsured motorist (UM/UIM) coverage is designed to protect you if you are involved in an accident with a driver who doesn't have any car insurance or has insufficient coverage to cover the damages. It also typically applies in hit-and-run accidents, where the at-fault driver cannot be located.

While it's not required by law in Texas, including UM/UIM coverage in your policy can safeguard you against the financial risks associated with accidents involving underinsured or uninsured drivers. This is especially important if you sustain catastrophic injuries or if you are hit by someone who flees the scene.

Will My Texas Auto Insurance Rates Increase If I'm Involved in a Car Accident?

In Texas, your insurance rates may increase after an accident, especially if you are found to be at fault. However, the specific impact on your premiums depends on various factors, such as your driving history, the severity of the accident, and your insurance provider's policies. In some cases, a minor accident with no injuries might not significantly affect your rates.

I Was in a Car Accident and the Other Driver Was at Fault. Can I File a Claim with Their Insurance Company?

Yes, if the other driver was at fault, you could file a claim with their insurance company to seek compensation for your damages. This is called a third-party claim. However, navigating the claims process can be complex, and insurance companies often try to minimize payouts. It's essential to consult with an experienced attorney to ensure your rights are protected.

How Long Do I Have to File a Car Accident Insurance Claim in Texas?

Generally, there is a 30-day window in which you must report a car accident to your insurance company, but it’s important to check your policy. For filing a personal injury lawsuit against an at-fault driver, there is a two-year statute of limitations in Texas. In any case, it's important to act promptly, as failing to file a claim within this time frame can result in you losing your right to pursue compensation.

What Is Personal Injury Protection (PIP) Coverage and Is It Required in Texas?

Personal Injury Protection (PIP) is a type of no-fault insurance coverage that helps pay for medical expenses and lost wages resulting from a car accident, regardless of who is at fault. In Texas, insurance companies are required to offer a minimum of $2,500 in PIP coverage, and you have the option to reject it in writing. However, we recommend considering PIP coverage, as it can provide valuable financial assistance in the event of an accident.

Can I Still Recover Damages If I Was Partially at Fault for the Accident?

Yes, Texas follows a "modified comparative negligence" rule, which means you can still recover damages if you are found to be partially at fault for an accident. However, your compensation will be reduced by the percentage of fault assigned to you. For example, if you are found to be 30% at fault and your total damages are $100,000, you can only receive $70,000 in compensation. It's crucial to note that if you are found to be more than 50% at fault, you are not eligible to recover any damages.

Why Should I Hire a Lawyer for Help with My Car Accident Insurance Claim?

While you don’t have to work with a lawyer after a car accident, it’s in your best interests to do so. Remember: insurance companies are focused on making a profit; they don’t want to help you get the most money possible, even if that’s what you deserve. These companies often use tactics like delaying claims or offering low settlements to get you to give up and take an offer that’s less than what you are owed. With an attorney, you can fight back against these practices and make sure the liable person or party is held accountable for all your damages.

A lawyer can handle the investigation, all communication with the insurance company, and gathering evidence, like police reports, medical records, and witness statements. This frees you to focus on your physical and emotional recovery without having the added stress of filing a claim. If the insurance company comes back with a too-low offer, your lawyer can help you determine what to do next, including going to court. If the insurance company isn’t treating you fairly, you lawyer can stand up for your rights.

Call Arnold & Itkin today at (888) 493-1629 for a free consultation. We're ready to help you decide if the insurance company is treating you fairly after your accident.