Car Insurance in Texas: What You Actually Need and How to Pay Less

Insurance is the part of car ownership that surprises people most, and it is the reason some of our recipients hesitate before saying yes to a vehicle. It is manageable once you understand what you are actually buying.

What Texas requires

Texas law requires liability coverage of at least 30/60/25. Those numbers are thousands of dollars:

• $30,000 for injuries to one person in an accident you cause
• $60,000 total for injuries to everyone in that accident
• $25,000 for damage to the other person's property

Notice what is missing. Liability covers the other person. It pays nothing toward your own car or your own injuries.

Liability only, or full coverage?

"Full coverage" is not an official product, it is shorthand for liability plus collision plus comprehensive. Collision pays for your car in a crash. Comprehensive covers theft, hail, flood, fire and a tree limb through the windshield, which matters more in Houston than in most places.

The usual rule of thumb: if replacing your car outright would be a genuine hardship, carry collision and comprehensive. If the car is worth less than roughly ten times your annual premium for that coverage, liability only may make sense. And if the car is financed, the lender will require full coverage regardless.

Two add-ons worth understanding

• Uninsured and underinsured motorist coverage: roughly one in five Texas drivers is uninsured. This covers you when the person who hit you cannot pay. It is usually inexpensive and it is the coverage people most regret skipping.
• Personal injury protection, or PIP: covers medical bills and some lost wages regardless of fault. Texas insurers must offer it, and you have to decline it in writing.

How to pay less without underinsuring yourself

• Get at least three quotes. The same driver and same car can vary by hundreds of dollars a year between carriers.
• Raise your deductible only as high as you could actually cover tomorrow out of savings.
• Ask about every discount by name: defensive driving course, good student, paid in full, paperless, low annual mileage, safety features, and bundling with renters insurance.
• Pay in full or set up automatic payments if you can. Monthly installment fees add up.
• Ask what a defensive driving course would save you. In Texas it often qualifies for a discount and can remove a ticket from your record.
• Keep continuous coverage. A lapse of even a few weeks raises your rate for years.

Watch out for these

A quote that is dramatically cheaper than everything else usually means minimum limits, a huge deductible, or no uninsured motorist coverage. Read the declarations page before you sign. Also be careful with policies sold through an unfamiliar storefront agency, and confirm the carrier is licensed through the Texas Department of Insurance.