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Insurance Requirements

Texas law requires you to be able to produce proof of financial responsibility to a police officer whenever you are operating a vehicle. What does "financial responsibility" mean, anyway? Basically, the law requires you to prove that if you cause an accident, you will be able to pay for the damages. In Texas, you can demonstrate proof of financial responsibility three different ways:

1)  By purchasing a Texas auto insurance policy, where an insurance company agrees to pay for damages up to a certain limit. In exchange, you agree to pay them a specified amount of money, called a premium.

2) Through a surety bond, where you insure yourself using real estate. Basically, you or other people willing to insure you must agree to give up the real estate if necessary to cover any losses you cause.

3) By depositing $55,000 with the state comptroller.

Since most of us don't own a lot of real estate or have $55,000 just lying around, self-insurance is not very common. Most people fulfill the financial responsibility requirement by purchasing a Texas auto insurance policy. To meet Texas' minimum insurance requirements, the policy has to have the following limits of liability: bodily injury: $25,000/person, $50,000/accident; and $25,000/accident for property damage. You will often see this written on your Texas insurance policy as 25/50/25.  The limit of liability is the maximum amount that the insurer will pay if you get in an at-fault accident. Different states have different insurance requirements, so if you are moving to Texas, you may need to change your coverage.

Like insurance everywhere, Texas auto insurance can be a headache at times. However, for your own protection and the protection of those around you, it's crucial that you be insured before you get behind the wheel of a vehicle.

If your driving record is so bad that you have a hard time getting insurance at all, you can secure coverage through the state's insurer of last resort, the Texas Automobile Insurance Plan Association. This coverage is liability only and carries a high price, but if you've been rejected by 2 or more insurance companies, you can get a policy here.

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