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As insurance claim attorneys, we get asked a lot of questions about the ins and outs of auto insurance policies and coverages, and we completely understand why. Auto policies can be confusing, and insurance providers can be deliberately vague in order to upsell you a more expensive package or to skirt responsibility after an accident when you need that claim payout. Worst-case-scenario planning is never fun, and we understand why many people take insurance policy offerings at face value or based on random recommendations.
To help, we’ve put together this list of the basics of coverage types and their applications. Coverage names and meanings can vary somewhat between states and between insurance companies, so if you are unclear, ask questions for the answers you need. With any luck, you’ll never need an insurance claim lawyer, but when accidents happen, Thompson Law is here for you.
What Types of Coverage Might Be in My Auto Policy?
Collision Coverage – Covers car repair costs, if it is repairable. If your car is totaled, it pays the actual current cash value of your car. Current cash value is calculated using age, mileage, and other factors that impact depreciation after purchase.
Comprehensive Coverage – Covers the cost of replacing or repairing vehicles that have been stolen, vandalized, or damaged by fire, weather or collision. This may also be referred to as hazard insurance or catastrophic loss insurance, especially in claims for severe natural events. This insurance can include rental car cost coverage during vehicle repair or replacement, but this is not universally the case.
Full Coverage – Although not a specific insurance type, “Full Coverage” refers to a combination of coverages that provide a very broad scope of protection. Typically, collision, comprehensive, and Uninsured/ Underinsured Motorists make up “full coverage”. More insurance coverage is more expensive than limited coverage because it offers greater protection for a larger variety of damages.
Liability Insurance – Covers financial damages when you are deemed at fault in an accident. It encompasses Bodily Injury (BI) and Property Damage (PD). While required by law in the US, states have the power to set minimum required amounts for their citizens.
Medical Payment Coverage – Covers or helps cover costs of medical bills resulting from the accident.
Minimum Coverage – Another term that refers to a combination of coverages, not a particular coverage type in itself. Generally, refers to a policy that includes just enough to meet state limits.
Multiple Coverages – The types of insurance coverage that make up a single policy.
Personal Injury Protection (PIP) – Covers medical bills similar to Medical Payment Coverage, but additionally provides for lost income and costs of caregiver services necessitated by the accident. All Texas auto policies automatically include PIP. Customers may elect out of this coverage by written agreement.
Property Damage (PD) – Covers the damage caused to someone else’s property, other vehicles, structures, or other items lost in the crash, up to a predetermined limit. Legally required as part of a minimum coverage policy in Texas, and nationwide.
Rental Car Coverage – Sometimes included with comprehensive coverage, covers rental car expenses up to a certain amount or for a set period of time while your car is inoperable, stolen, being repaired, or being replaced.
Towing and Labor – Covers services like towing, changing a flat tire, jump-starts, or other breakdowns. Sometimes referred to by other branded names, like Roadside Assistance.
Underinsured Motorist (UIM) – Covers you, the policyholder, when the other driver does not have sufficient coverage for all the accident costs. Texas insurance companies must offer this with every policy. Policyholders may elect to opt-out of it by written agreement.
Uninsured Motorist (UM) – Coverage for you in the case that the other motorist does not have auto insurance. Texas insurance companies must offer you this coverage, and you may elect to opt-out of it by written agreement.
Important Terms for Auto Policies
Premium – Monthly or annual costs to maintain your insurance coverage. Usually, lower when you have a higher deductible, and higher when you have a low deductible.
Deductible – Amount that you are responsible for paying before your insurance coverage takes effect. Typically lower when you have high premiums, and higher when you have lower premiums.
The Main Players and the Worst of the Worst
You likely know all the big names in insurance – GEICO, Progressive, Liberty Mutual, State Farm, Farmers, USAA, Allstate. They spend millions and millions of dollars in advertising with flashy celebrity ads to gain your business. However, there are many more insurance providers than just those mega-corporations. There are pros and cons to purchasing your insurance policy from any type of insurer, from the largest corporate conglomerate to the local mom and pop shop.
If there’s any consensus about the worst insurer, however, recent news reports and investigative journalists have found that there is one company out of the large firms that consistently performs terribly toward those bringing claims and even toward their own customers –Allstate. Allstate has been criticized for excessively low settlement offers and outright claim denials. They also famously came under fire for having a “suckers list” that included clients who they knew they were overcharging in premiums and deductibles. They targeted these consumers, knowing that their deserved market rate was far less, but they were able to continue charging and increasing costs based on these customers’ habits and spending potential.
Clearly, the ethics of these companies are not always admirable. The good news is, there are resources available to you as you decide what insurance to choose. You should be able to expect better from your insurance company. You are their client! But when things inevitably go wrong in insurance negotiations, know that Thompson Law is standing by to help you, anytime 24/7.
Minimum Auto Insurance Requirements in Texas
You may have heard the terms 30/60 coverage, or that Texas is a 30/60/25 state. These descriptors refer to Texas’ minimum requirements for auto insurance, otherwise known as liability coverage. The coverage breakdown includes:
$30,000 Bodily Injury Liability (BI) per individual
$60,000 Bodily Injury Liability (BI) per accident
$25,000 Property Damage Liability (PD)
After an accident where the at-fault party has liability coverage, payouts up to these amounts may be issued based on loss and injury caused from that accident. If losses are higher than these amounts, claims may be made to other parties’ insurance, and lawsuits may be brought against individuals.
Additionally, it is required in Texas that insurance providers offer UM/UIM and PIP. Policyholders may formally reject these coverages in writing. It is important to understand as a policy owner that if you are involved in a collision with an at-fault party who does not have insurance, or has inadequate insurance, it is very difficult to recover damages for your injuries without UM/UIM and/or PIP.
Our clients often seek our help as an insurance claim attorney firm, because they have been hit by a driver who only has liability coverage. These coverage amounts are simply not enough to cover the medical bills, car repairs and other damages that occur in many auto accidents. If you need an insurance claim legal help after being hit by an uninsured, underinsured, or minimally insured driver, don’t hesitate to reach out for the assistance you deserve. Your team at Thompson Law is standing by and ready to fight for you.
Recommended Auto Insurance for Financed Cars
When you are still in the process of making payments on your car loan, your lender determines the level and type of coverages that you must have. If you do not comply with the policy limits required, you risk being in default of your loan, which has serious consequences for your credit and future ability to take out other loans. Lenders have this control during the term of your loan because they are the actual owner of your vehicle until it is paid off. The following list includes recommended coverage amounts by Texas auto insurers. Your lender may require different amounts from these guidelines, based on the specific value of your car and other factors.
Type of Coverage and Recommended Amounts:
$100,00 Bodily Injury Liability (BI) per individual
$300,000 Bodily Injury Liability (BI) per accident
$50,000 Property Damage (PD)
Comprehensive Collision Coverage
Underinsured/Uninsured Motorist Coverage (UM/UIM)
Personal Injury Protection (PIP)
Texas Auto Insurance Types: The Bottom Line
The minimum auto insurance requirements for the state of Texas rank fairly well when compared nationally. Texas’ minimum required liability coverage is higher than 28 other states. Texas would surpass the coverage requirements of about a dozen more states if UM/UIM coverage was essential there. In addition to Bodily Injury Coverage per person, per accident, and Property Damage per accident, about 50% of states in the US mandate some amount of coverage for the case of a wreck with Under-Insured or Uninsured motorists (UM/UIM).
Selecting coverage that is right for you and for your family is an important decision. We hope this guide to the types of coverage available and the implications of minimum versus recommended coverage are helpful. And hopefully, you won’t need to file an insurance claim by staying safe and accident-free. No one expects to need an insurance claim attorney. However, should you need any help with an accident claim, a difficult insurance adjuster, or you are just hitting an insurance corporation stonewall, Thompson Law is always here to help?
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The State of Texas has a statute of limitations of two (2) years for personal injury cases, so if you have experienced a car accident, truck accident or any personal injury incident, consult with an experienced personal injury attorney. The sooner you know your options, the sooner you are on a smooth path to recovery and your deserved compensation. If you’ve been hesitating to reach out, don’t delay any further. Call Thompson Law right away for assistance with your injury and claim.