Most of us would rather go to the dentist than think about shopping for insurance. The bottom line, is that Texas requires that all drivers carry car insurance. Therefore, if you are spending your money on auto insurance why not make sure you have adequate coverage? I put together this auto insurance buyer’s guide to help you make sure you’re getting the most coverage for your insurance dollar.
There are seven different coverage options for auto insurance: Liability, PIP or Medical Payments, Uninsured/Under-Insured Motorist, Comprehensive, Collision, Rental, and Towing & Labor. Below is a breakdown of each coverage and why you should carry it on your auto insurance policy.
Liability-Texas state law requires anyone with a driver’s license to carry liability insurance. Liability insurance pays for the other person if you are deemed to be at fault for an auto accident. The state minimum in Texas is 30/60/25, $30,000 per person bodily injury/$60,000 per accident bodily injury/$25,000 property damage. In my opinion this isn’t enough coverage, our agency recommends that everyone carry at least $100,000/$300,000/$100,000. Think about it this way, if someone were to be severely injured or killed in an auto accident, $30,000 isn’t a lot of money to cover medical expenses. You could be held personally liable for any damages over $30,000. Always carry the maximum liability coverage you can afford to make sure you are properly protected.
Medical Payments– Otherwise known as Med-Pay, this coverage is for medical bills that may be incurred by your or your passengers, regardless of who is at fault for an auto accident. You may want to carry this coverage to cover yourself or passengers that may not carry health insurance.
Personal Injury Protection (PIP) – PIP covers lost wages and/or medical payments resulting from an auto accident, regardless of who is at fault. Most policies do not give you the option to carry both Med-Pay and PIP, you must chose one or the other. Because PIP also covers lost wages it is normally more expensive than Med-Pay.
Uninsured Motorist– Uninsured motorist/Underinsured motorist covers you and your vehicle if you are involved in an accident with someone who doesn’t carry auto insurance or doesn’t have enough insurance to cover the damage they caused to you or your car. It is estimated that 1 in 5 drivers in Texas does not carry auto insurance. Uninsured motorist limits are similar to liability limits and typically have to match the limits you carry for liability insurance. Uninsured motorist property damage normally carries a $250 deductible.
Comprehensive– Comprehensive coverage covers damage to your automobile from things other than a collision. This coverage is not required by law but if you have a loan on your vehicle you may be required by the lien holder to carry this coverage. Examples of comprehensive losses would be theft, vandalism, hail, flood, fire or falling objects. Comprehensive claims are subject to a deductible. Make sure you carry a deductible that you feel comfortable paying should something happen. Also, keep in mind the higher the deductible the lower the premiums are for this coverage.
Collision– Collision coverage covers your car if it is damaged in collision with another vehicle or object. Collision coverage is also subject to a deductible so make sure you carry a deductible that you feel comfortable paying but high enough to keep your premiums manageable. Like comprehensive coverage, collision is not required by law but is typically required if you carry a lien on your car.
Rental Reimbursement– This coverage is also known as loss of use. It does not cover you while driving a rental car but rather provides you with a rental car should your car be in the shop for repairs due to a covered loss. Most rental reimbursement coverage is $30/day up to 30 days. However you can purchase higher limits.
Towing and Labor– This coverage may also be referred to as roadside assistance. Depending on your policy you may be able to call the company directly and have them send out a wrecker to assist you or change a flat tire. Other companies reimburse you for these expenses. Once you have paid to have the car towed or tire changed you can submit the paid invoice to your insurance carrier and they will reimburse you up to the policy limit.
Now that you understand more about auto insurance coverage options you will need to decide what coverage and limits you would like to carry. Once you have made that decision you are ready to start shopping.
Here is a list of information you will need when you start your search:
- Drivers license numbers and dates of birth for all drivers on the policy.
- VIN (vehicle identification numbers) for each car.
- Driving record information for all drivers (accidents, tickets, etc).
- Discount options-Defensive driving, pleasure use cars, alarms, good student discounts, etc.
I hope this auto insurance buyer’s guide helps you in your search for car insurance.
Originally written September 6, 2012, Updated April 2016