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Auto Insurance Coverages*

Automobile insurance pays for damages, injuries, and other losses specifically covered by your policy. Many insurance companies use the Texas Personal Automobile Policy, a standardized policy form that offers eight types of coverages. Companies may sell alternative policies if the Texas Department of Insurance (TDI) approves them in advance.

Read your policy carefully because coverages can vary by policy and company. Pay special attention to the exclusions section, which lists the things your policy doesn't cover. 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 each of your coverages and deductibles.

The following summarizes the eight coverages in the Texas Personal Automobile Policy. Although your coverages and policy terms may differ from these, this summary can help you understand the coverages and the way they work.

  1. Liability Coverage (Basic liability coverage meets the state's financial responsibility requirement.)

  2. What it pays: Other people's expenses for accidents caused by drivers covered by your policy, up to your policy's dollar limits. These may include the other people's medical and funeral costs, lost wages, and compensation for pain and suffering car repair or replacement costs auto rental while the other driver's car is being repaired punitive damages awarded by a court.

    Liability insurance also pays your attorney fees if someone sues you because of the accident and your bail up to $250 if you are arrested.

    Who it covers: You and your family members. Family members include anyone living in your home related to you by blood, marriage, or adoption, including your spouse, children, in-laws, adopted children, wards, and foster children. Other people driving your car with your permission, family members attending school away from home, and spouses living elsewhere during a martial separation might also be covered.

    You and your family members might be covered when driving someone else's automobile — including a rental car — but not a car that you don't own but have regular access to, such as a company car.

    Note: Some policies won't cover other people, including family members, unless they're specifically named in the policy. Your policy's declarations page should list the names of all of the people covered by the policy.

  3. Medical Payments Coverage

  4. What it pays: Your medical and funeral bills resulting from accidents, including those in which the other person is a pedestrian or bicyclist.

    Who it covers: You, your family members, and passengers in your car, regardless of who caused the accident.

  5. Personal Injury Protection (PIP) Coverage

  6. What it pays: Same as 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, regardless of who caused the accident.

    An insurance company must offer you $2,500 in PIP, but you can buy more. If you don't want PIP, you must reject it in writing.

  7. Uninsured/Underinsured Motorist (UM/UIM) Coverage

  8. What it pays: Your expenses from an accident caused by an uninsured motorist or a motorist who did not have enough insurance to cover your bills, up to your policy's dollar limits. Also pays for accidents caused by a hit-and-run driver if you reported the accident promptly to police.

    Bodily injury UM/UIM pays without deductibles for medical bills, lost wages, pain and suffering, disfigurement, and permanent or partial disability. Property damage UM/UIM pays for auto repairs, a rental car, and damage to items in your car. There is an automatic $250 deductible, which means you must pay the first $250 of the repairs yourself.

    Who it covers: You, your family members, passengers in your car, and others driving your car with your permission.

    Insurers must offer UM/UIM coverage. If you don't want it, you must reject it in writing.

  9. Collision (Damage to Your Car) Coverage (If you still owe money on your car, your lender will require you to maintain collision and comprehensive coverages.)

  10. What it pays: The cost of repairing or replacing your car after an accident. Payment is limited to your car's actual cash value, minus your deductible. Actual cash value is the market value of a car like yours without damages.

    Who it covers: You, your family members, passengers in your car, and others driving your car with your permission.

  11. Comprehensive (Physical Damage Other than Collision) Coverage

  12. What it pays: The cost of replacing or repairing your car if it is stolen or damaged by fire, vandalism, hail, or a cause other than a collision. Comprehensive coverage also pays for a rental car or other temporary transportation if your car is stolen. Your policy won't pay for an auto theft unless you report it to police. Payment is limited to your car's actual cash value, minus your deductible.

    If you still owe money on your car, your lender will require you to have collision and comprehensive coverage.

  13. Towing and Labor Coverage

  14. What it pays: Towing charges when your car can't be driven. Also pays labor charges, such as changing a tire, at the location where your car became immobile.

  15. Rental Reimbursement Coverage

  16. What it pays: A set daily amount for a rental car if your car is stolen or is being repaired because of damage covered by your policy

  17. Other Coverages

  18. Stereo Equipment

    Your policy won't pay for CDs, MP3 players, cell phones, citizen band radios, or stereo equipment not permanently installed in your car. However, you can buy endorsements to your policy that provide separate coverage for these items for an additional premium.

    New or Additional Automobiles

    If you buy another car, your policy might automatically cover it with certain limitations. Read your policy to know whether it automatically covers an additional or replacement car.

    In general, an additional car usually has the same coverage as the car on your policy with the broadest coverage. For example, if you have two cars — one with liability coverage only and one with liability, collision, and comprehensive coverages — and you buy a third car, the third car will automatically have liability, collision, and comprehensive coverage.

    A replacement car usually has the same coverage as the car it replaced. For example, if you trade in an older car that only had liability coverage, the new car will automatically have only liability coverage.

    Be sure to tell your insurance company as soon as possible that you have added or replaced a car and which coverages you want. You could lose coverage on an additional or replacement car if you wait longer than the number of days specified in your policy to notify your insurance company.

    Rental Cars

    Auto rental agencies offer collision damage waivers and liability policies. The collision damage waiver is not insurance. It is an agreement that the rental company will waive its right, with certain exceptions, to recover the cost of the car's damage from the renter.

    If you have auto insurance, your policy may already cover damage to a rental car. Your coverage limit, however, might be less than the value of a rental car. Read your policy to know what's covered and the coverage limits. If your coverage limit is too low, consider increasing it. You will pay more in premium, but it might be cheaper than buying additional coverage through the rental agency, especially if you rent cars often.

    If you don't own a car, but borrow or rent cars often, you can buy a non-owner liability policy. A non-owner policy pays for damages and injuries you cause when driving a borrowed or rented car, but it does not pay for your injuries or damage to the car you are driving.

*Disclaimer: The information on this website is believed to be accurate; however, please refer to your own policy details for complete information.