Texas Auto Insurance Requirements: What You Need To Know

In Texas, drivers must show proof that they can pay for any accidents they cause.

Many drivers have traditional auto liability coverage to prove they can take financial responsibility. Others might use a surety bond, deposit, or even self-insure if they’re eligible. These alternative methods might sound better than a conventional auto policy, but there are state requirements for each that are essential to pay attention to.

Check out this guide to Texas auto insurance requirements to ensure you’re covered when driving in the Lone Star state.

Texas minimum car insurance requirements

Texas law requires licensed drivers to be able to pay for any accidents they cause and be able to provide official proof of their ability to pay at all times. Most drivers show they can pay for an accident by buying liability insurance coverage. If you’re found to be at fault in an accident, this coverage helps cover the costs to repair or replace the other driver’s car and assists with covering the other driver’s medical bills along with those of their passengers.

Texas law also offers other ways for drivers at fault in an accident to prove their ability to pay.

One method is for drivers to purchase a surety bond. A surety bond can replace an auto liability policy if it covers the same minimum amounts of a policy and meets specific criteria required by the state.

A bond is an agreement between an individual (the principal), a second party (the obligee), and a bonding company (the surety). When the principal buys a bond, the surety company promises to pay on the principal’s behalf to the obligee (in this case, the state of Texas) only if the principal cannot do so.

Unlike insurance, surety bonds don’t pay for the cost of an accident. The at-fault driver must pay to cover any damages they are liable for; if they can’t, the obligee can claim the bond. The principal, or at-fault driver, has to pay back the surety company for the claim amount with their assets.

A Texas driver can also establish financial responsibility by depositing $55,000 in cash or another acceptable method with the comptroller or county judge. Once the deposit is received, the comptroller or judge will provide a certificate saying that a driver has met the financial responsibility requirements to drive legally.

In some cases, drivers may qualify to self-insure against an accident without providing a deposit, but you must meet certain criteria, like having 25 or more vehicles registered in your name.

While you can use a bond or deposit in Texas, most people buy auto liability insurance since it's much easier to obtain and usually cheaper.

Minimum liability requirements

If you purchase Texas car insurance, you must meet the minimum liability requirements with a type of coverage called 30/60/25, meaning:

• $30,000 of bodily injury liability per person
• $60,000 of bodily injury liability per accident
• $25,000 property damage liability per accident

A bodily injury liability policy will cover the medical bills for each person you injure in a car accident. If you only have the minimum liability insurance, the insurance company will pay up to the liability limit of $30,000 per person for the other person’s medical bills. When more than one person is hurt in an accident, the insurance company will pay up to the per-accident policy limit of $60,000.

In addition to bodily injury liability, Texas drivers must maintain at least $25,000 in property damage liability. This coverage pays to repair or replace the other driver’s car or damaged property (like a fence) when you’re at fault in an accident.

Liability coverage does not cover your medical bills. To ensure your injuries or damages are covered, you must purchase additional coverage such as comprehensive, collision, or medical payments insurance.

Repair bills and medical care can quickly exceed the minimum policy limits required. If the other driver’s medical bills cost more than your insurance policy limits, they can sue you for the remaining portion that insurance doesn’t cover.

That’s why it’s generally recommended that drivers carry more than the state minimum amount of car insurance coverage.

Penalties for driving without insurance

You’ll face consequences if you drive in Texas without at least the minimum amount of auto insurance coverage or an authorized certificate for a surety bond, deposit, or self-insurance.

• For your first offense, you’ll pay a fine between $175 and $350.

If you were convicted previously of driving without insurance, you might also face the following:

• Fines between $350 and $1,000
• Having your car impounded
• Suspension of your vehicle registration or driver’s license until you provide proof of insurance

In addition to fines and suspensions, you may also have to file an SR-22 certificate from your insurance company and pay a reinstatement fee before your driver’s license can be reissued.

SR-22 certificates are usually a red flag for insurance carriers and may mean a higher premium or difficulty finding coverage.

Other types of coverage to consider

If you need more coverage than the minimum Texas state law requires, consider adding one or more of the policies below. If you lease or finance a car, your lender may require you to maintain specific coverages and policy limits for the life of your lease or loan.

Some additional coverage options include:

• Medical payments: Medical payment coverage can help cover medical expenses associated with car accidents. If you or your passengers are injured in an accident or as pedestrians, this coverage will protect you no matter who is at fault.
• Collision: This insurance covers repairing or replacing your vehicle if it’s damaged in a crash. While property damage liability covers the other driver’s expenses when you’re at fault in an accident, collision coverage is solely for your vehicle repair or replacement costs.
• Comprehensive: This coverage will pay if your car is stolen, vandalized, or damaged in events other than a collision, such as flooding, hail, fallen trees, lightning, accidents with animals, and falling objects.
• Uninsured motorist and underinsured motorist coverage: UM/UIM coverage helps with expenses if you’re involved in an accident with an at-fault driver who doesn’t have any insurance or enough insurance to cover the damage or medical bills. Although it's not a requirement in Texas, UM/UIM is recommended since you’ll be forced to cover your own expenses if the other driver doesn’t have insurance or the means to pay.
• Personal umbrella policy: If you hurt another driver and your standard insurance policy isn’t enough to cover the medical costs or repair bills, your personal umbrella policy, or PUP, can step in and add additional coverage. This type of coverage can help protect assets like your home if you’re ordered to pay for any damages above your bodily injury or property limits.
• Personal injury protection: PIP coverage can help you pay for medical bills or costs not covered by your health insurance or medical payments insurance. Some of the covered items include lost income, assistance services if your injury prevents you from taking care of daily living tasks like cooking and cleaning, childcare expenses, and, in some cases, funeral expenses.
• GAP insurance: If your car was totaled or stolen while you’re still paying it off, you might have to make car payments on a vehicle you no longer have. GAP, or guaranteed asset protection insurance, can help cover the difference between what a car is worth and the loan amount you have left to pay if you can no longer drive the vehicle.
• Rental reimbursement: This policy helps cover renting a car while your vehicle is being repaired after an accident.
• Roadside assistance: If you need roadside assistance, this policy can help cover standard services like towing, jump-starts, tire changes, fuel delivery, and sometimes even locksmiths.

Policies and insurance rates vary from company to company, so be sure to get quotes from multiple companies before you decide on a new policy.

FAQ

Bottom line

Ensuring you can pay for an accident in Texas is essential for all drivers. Whether you purchase insurance, a bond, or leave a deposit with the Texas court, you must understand the financial responsibility and the implications if you are found guilty of causing an accident.

While it may seem like no big deal to drive without insurance, getting caught can lead to fines, license and vehicle suspension, and even higher insurance costs if you need an SR-22 form. Do your homework and research the best options before getting behind the wheel.

Check out our list of the best car insurance companies to help you in your search.