If you drive in Texas, you know how crazy it gets out there. Accidents
happen, fenders get bent, people get hurt. Or you're innocently parked in your
driveway and a tree limb crashes through your windshield. When disaster strikes,
auto insurance is there to protect you.
Why buy auto insurance?
1.) Auto insurance protects you against the financial risk
associated with personal injuries and property damage caused by auto accidents,
theft, vandalism, or natural disasters.
2.) Texas requires you to purchase at least a minimum
amount of liability coverage. Other types of auto insurance coverage may be
optional or required, depending on state regulations.
3.) If you have a car loan outstanding, you'll generally be
required by the lender to purchase at least a minimum amount of auto insurance.
Liability coverage
Texas law requires you to purchase a minimum amount of some or all of the
following types of liability coverage:
- Bodily injury liability: Protects your assets
if you are held liable for an auto accident in which other people are injured
or killed.
- Property damage liability: Covers repairing or
replacing the autos or other property of other people.
- Uninsured/underinsured motorist coverage: Unless
you live in a "no-fault" state (where your own insurance will cover
your losses), this coverage insures you against losses caused by other drivers
with little (underinsured) or no (uninsured) auto insurance.
To adequately protect yourself, you may want to purchase much more than the
minimum amount of coverage required for Texas.
Collision, other-than-collision, and medical payments coverages
Although these types of coverage are optional in most states, it often makes
sense to purchase them, unless you can afford to pay for damages yourself.
- Collision: Pays to repair or replace your car
if it's damaged in an accident.
- Comprehensive: Insures your car against damage
caused by something other than an auto accident (e.g., theft, fire, flood,
vandalism).
- Medical payments or personal injury protection:
Covers various medical expenses not covered by your health insurance or your
passengers'.
And then the insurance company pays for everything, right?
Wouldn't that be nice? But it's not always true. Here are some things you'll
always need to cover yourself:
- Deductibles: The amount of money that you've
agreed to pay out of your own pocket before your insurance coverage kicks
in.
- Exclusions: Events or situations your policy specifically
omits from coverage, such as property damage or personal injury you intentionally
cause to others, or damage to your own car due to mechanical failure.
- Costs above limitations: Any
expenses for which you're responsible that exceed the caps on the dollar amounts
of coverage you're entitled to receive under your policy.
Driving a good bargain
Many factors affect your auto insurance premiums, including your age, the state
in which you live, the make and model of your car, where your car is garaged,
and your driving record. Although you can't do much about some of these factors,
here are some things you can do to help lower your premiums:
- Increase your insurance deductible.
- Eliminate optional coverages (e.g., towing and labor, rental insurance)
from your auto insurance.
- Eliminate collision and comprehensive coverage if you drive an older car
valued at less than $1,000 and could afford to pay for repairs if necessary.
- Ask about available discounts (e.g., low-mileage discounts, discounts for
safety or antitheft devices) for your auto insurance.
- Keep your car in a garage.
- Drive safely to establish a good driving record.
Shop around
It's important to shop around for auto insurance coverage. Insurance premiums
for the same coverage on the same car can vary widely among different insurers,
even in states that regulate auto insurance rates. A particularly good time
to investigate your alternatives is when your current insurance policy is up
for renewal, but you can shop and change policies at any time. Get quotes from
several reputable companies, but don't let price be your only consideration.
Make sure the coverage offered by each insurer meets your needs, and find out
whether the insurer has a good track record in the industry (contact Texas’s
Department of Insurance for more information).
Please note that this description/explanation is intended only
as a guideline.