How Much Car Insurance Do I Need

Required Vehicle Insurance

Texas requires drivers to buy liability insurance in order to abide by the ‘driver responsibility law’. This law states that every driver must buy at least the minimum liability coverage. Liability means your personal responsibility for the accidents you cause, and this is necessary insurance coverage to satisfy state law.

In other words, if you are liable, you are at fault and responsible for making the injured party whole again. This includes the vehicle, the driver and any passengers in the other vehicle.

Texans refer to this required insurance as ‘30/60/25’ named for the coverage it includes. This coverage law says you must have: $30,000 to cover the other person’s injuries up to $60,000 per accident plus $25,000 property damage, hence the ‘30/60/25’ nickname

When you purchase this insurance, the insurance company gives you a card to show you have paid for this insurance and met the state’s minimum vehicle insurance coverage. Keep this card with you at all times.You may be asked for ‘proof of insurance’ by local and state authorities should you be stopped for a traffic violation or at a license check.

It is important to remember that this minimum coverage does not pay for any of your personal injuries or your vehicle. This coverage only pays the person you injured and the vehicle you damaged.

Also, keep in mind that this minimum coverage may not fully pay for the injuries and damages you caused. If this is the case, you can be sued by the other driver and the injured passengers.

Unless you are financially wealthy enough to pay out of your pocket all lawsuits which may arise, you need additional protection. Without additional insurance to cover these possibilities, you are personally responsible to pay additional costs. These include your own vehicle repair and medical expenses. The best, smartest option is additional insurance.


Types of Additional Insurance to Consider

To cover your own vehicle cost of repair, consider collision coverage. If your vehicle is not paid for, this coverage is automatically added to your car insurance by the lender anyway. If you own your vehicle, and do not want to risk the costs of accident repairs, collision insurance is still good idea.

This insurance pays to repair or replace your vehicle. If your vehicle is determined a total loss by the insurance company, they will pay the value of the vehicle minus depreciation.

The only situation that collision coverage may not be needed is with older vehicles. If your old clunker is worth only a couple of hundred dollars, the collision insurance may cost more annually than the vehicle is worth. It just does not make financial sense to spend more on insurance than the vehicle is worth

Comprehensive coverage is another insurance addition worth thinking about. This insurance protects your vehicle in cases of fire, vandalism, or car break-ins. It also pays the owner if the vehicle is damaged from a falling object or stolen.

In short, comprehensive insurance, not including collision, protects the owner from a host of other potential hazards that could drain personal financial resources and wreck budgets

Another vehicle insurance coverage, known as medical payments coverage, pays the medical and funeral bills caused by an accident. This insurance covers the owner, family members and passengers riding in the car. It even covers pedestrians and bicyclists

Two other insurance coverage plans worth consideration are personal injury coverage, known as PIP or personal injury protection, and uninsured or underinsured motorist, UM or UIM.

Personal injury or PIP pays 80 percent of lost income plus the costs of a personal caregiver during recovery. This is a worthwhile purchase if you are the only source of family income, or even if you are the majority income earner

Uninsured and under insured motorist protects against drivers who are driving illegally, as in driving without insurance, or who have not purchased enough insurance to cover the cost of damages caused by their accident.

It also pays the owner for hit-and-run drivers

Of course, there still other coverage plans available, but costs can soon outweigh the value of coverage you may never need. Be insurance savvy, not insurance poor.