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What is General Liability Insurance
What is general liability insurance?
Texas law requires people who drive in Texas to pay for the accidents they cause. Most drivers do this by buying auto liability insurance. Liability insurance pays to repair or replace the other driver's car and pays other people's medical expenses when you’re at fault in an accident.
If you buy insurance to meet the state's financial responsibility law, you must buy at least the minimum amount. The current minimum liability limits are $30,000 for each injured person, up to a total of $60,000 per accident, and $25,000 for property damage per accident. This basic coverage is called 30/60/25 coverage.
Because of car prices and the high cost of medical care, the minimum amounts might not be enough to pay all of the other driver's costs if you're at fault in an accident. Other drivers could sue you to collect the difference. Consider buying more than the minimum limits to protect yourself financially.
Liability insurance doesn't pay to repair or replace your car or to treat your injuries. Other types of coverages – such as personal injury protection, uninsured or underinsured motorist, medical payments, collision, and comprehensive – can help you pay for these expenses.
Proof of Financial Responsibility
When you buy an auto policy, your insurance company will send you a proof-of-insurance card. You must show the card when you:
are asked for it by a police officer,
have an accident,
register your car or renew its registration,
get or renew your driver's license, and
have your car inspected.
Know Your Rights
Texas has a Consumer Bill of Rights for auto insurance. Your insurance company must send you a copy with your policy. Read it to understand your rights under Texas law.
Auto Insurance Coverages
Depending on the types of coverage you have, auto insurance pays for car repair or replacement, medical expenses, rental cars, towing, court costs, and other expenses.
Read your policy carefully because coverages vary. Pay special attention to who and what is covered by your policy. Also note the exclusions, which are the things your policy doesn't cover. The following are some common exclusions:
Named driver. Some policies cover only household residents specifically named on the policy.
Excluded driver. Excludes coverage for people specifically named in an endorsement to your policy.
Racing. Excludes coverage if you use your car in a racing event.
Ride-booking. Most policies exclude coverage when you’re using your car for a ride-booking service like Uber or Lyft. Some insurance companies offer policies specifically for drivers for ride-booking companies.
Intentional acts. Excludes coverage for losses that were intentional.
The front page of your policy – called the declarations, or dec, page – shows the exact name of your insurance company, your policy number, and the amount of your coverages and deductible.
Note: The deductible is the amount you must pay before your insurance company will pay. For example, if you have a claim for $1,000 and a deductible of $300, the insurance company will automatically deduct $300 from the amount it pays you.
Many insurance companies use the Texas Personal Automobile Policy, a standardized policy form that offers eight types of coverages. Companies may sell other policies that the Texas Department of Insurance (TDI) has approved. Some of these policies have more limited coverage. The following summary can help you understand the eight basic auto coverages (please note that your coverages may be different, depending on the type of policy you buy).
1. Liability Coverage (basic liability coverage meets the state's financial responsibility requirement.)
What it pays: The following expenses, up to your policy's dollar limits, for the people in the other car involved in an accident that you or someone covered by your policy caused:
medical and funeral costs, lost wages, and compensation for pain and suffering;
car repair or replacement costs; and
car rental for the other driver while their car is being repaired.
Liability insurance also pays your defense costs, including attorney fees if someone sues you because of the accident. If you are arrested following an accident, liability insurance will pay up to $250 for bail.
Who it covers:
You and your family members. (Family members include anyone living in your home related to you by blood, marriage, or adoption. This includes your spouse, children, in-laws, adopted children, and foster children.)
Other people driving your car with your permission.
Family members attending school away from home.
Spouses living elsewhere during a separation.
You and your family members might be covered when driving someone else's car – including a rental car – but not a car that you don't own but have regular access to, such as a company car. Some policies provide only liability coverage when you drive a car you don’t own. Physical damage coverage for damage to the unowned vehicle might not transfer. Ask your agent before renting a car or driving a car you don’t own or lease.
Some policies – called named driver policies – won't cover people who live with you, including family members, unless they're specifically named in the policy. For these policies, the declarations page must list the names of the people the policy covers.
2. Collision Coverage (for damage to your car)
If you still owe money on your car, your lender will require you to have collision coverage.
What it pays: If the insurance company decides your car can be fixed, it will pay you the cost of repairs. If the company totals your car, it will pay you the actual cash value of your car. Actual cash value is the current value of your car, minus depreciation. Whether the company decides to repair your car or total it, you’ll get only up to the dollar limits of your policy. Your policy’s dollar limits are shown on the declarations page of your policy.
Who it covers: You, your family members, and anyone else insured under your policy.
3. Comprehensive Coverage (other than collision)
If you still owe money on your car, your lender will require you to have comprehensive coverage.
What it pays: The cost of replacing or repairing your car if it’s stolen or damaged by fire, vandalism, hail, falling objects, or an event other than a collision. Comprehensive coverage might pay for a rental car. Your policy won't pay to replace a stolen car unless you report the theft to police.
Payment is limited to your car's actual cash value, minus your deductible.
4. Medical Payments Coverage
What it pays: Medical and funeral bills resulting from an accident.
Who it covers: You, your family members, passengers in your car, and other injured people, including bicyclists and pedestrians, regardless of who caused the accident.
5. Personal Injury Protection (PIP) Coverage
What it pays: Similar to medical payments coverage, plus 80 percent of lost income and the cost of hiring a caregiver for an injured person.
Who it covers: You, your family members, and passengers in your car, and other injured people, regardless of who caused the accident.
Your insurance company will automatically give you PIP coverage, but you may reject it in writing if you don’t want it. The company must offer you $2,500 in PIP coverage, but you can buy more from most companies.
6. Uninsured/Underinsured Motorist (UM/UIM) Coverage
What it pays: Your expenses from an accident caused by an uninsured motorist, a motorist who did not have enough insurance, or a hit-and-run driver. Also pays for personal property that was damaged in your car.
There is a mandatory $250 deductible for property damage. This means you must pay the first $250 of the expenses yourself before the insurance company will pay.
There are two types of UM/UIM coverage:
Bodily injury UM/UIM pays for medical bills, lost wages, pain and suffering, disfigurement, and permanent or partial disability. There is not a deductible with this type.
Property damage UM/UIM pays for auto repairs, a rental car, and damage to items in your car.
Who it covers: You, your family members, passengers in your car, and others driving your car with your permission.
Insurance companies must offer UM/UIM coverage. If you don't want it, you must reject it in writing.
7. Towing and Labor Coverage
What it pays: Towing charges when your car can't be driven. Also pays labor charges, such as changing a flat tire or jump-starting your battery.
8. Rental Reimbursement Coverage
What it pays: A set daily amount for a rental car if your car is stolen or being repaired. Your company only pays for rental reimbursement if your car was damaged by something that your policy covers, such as fire or theft.