The Texas Department of Insurance is issuing this bulletin to remind insurers that minimum financial responsibility limits for all personal and commercial automobile bodily injury liability coverage will be increasing on January 1, 2011. This change was mandated by amendment to §601.072, Subtitle D, Title 7 of the Transportation Code (Motor Vehicle Safety Responsibility Act) enacted by the 80th Texas Legislature, by SB 502, effective September 1, 2007.
Pursuant to §601.072, Subtitle D, Motor Vehicle Safety Responsibility Act, effective January 1, 2011, the minimum coverage amounts for all automobile liability insurance will change from $25,000 to $30,000 for bodily injury to or death of one person in one accident and from $50,000 to $60,000 for bodily injury to or death of two or more persons in one accident. The minimum coverage amount for automobile property damage liability insurance will remain at $25,000 for damage to or destruction of property of others in one accident.
SB 502, 80th Legislative Session, (the Act) provided that the initial limit increase to 25/50/25 applied to all policies delivered, issued for delivery, or renewed on or after April 1, 2008 and policies issued or renewed before April 1, 2008 were governed by the law as it existed immediately before the effective date of this Act and that law continued in effect for that purpose. SB 502 provided no other implementation language other than that the second limit increase was effective January 1, 2011. Thus the statutory change for the limit increase was enacted and took effect prior to the issuance or renewal of policies that may be in effect now or after January 1, 2011.
The Department is aware that many insurers issued policies in 2010 with terms continuing into 2011. The Department considers the rates filed and currently applied to the policies in effect to be the appropriate rates to use for these policies.
As for policies not yet issued or renewed, the Department reminds insurers that under Insurance Code Chapter 2251, all rates, applicable rating manuals and supplementary rating information must be on file before they are used. Any insurer that has not filed a rating plan with rates and rules contemplating the policy limits may do so for use on policies that have not yet been issued or renewed.
The Department is aware that insurers are implementing this change in law using various approaches. Overall, the Department expects insurers to honor their policies in compliance with the law. The Department further expects insurers to be able to promptly inform policyholders of the coverage limits as necessary, such as after an accident. For purposes of compliance with Transportation Code Chapter 601, after January 1, 2011 and until the expiration of the policy, the previously issued proof of insurance card remains valid.
Questions regarding rate filings can be directed to the Property and Casualty Actuarial Division at 512-475-3017 or PCActuarial@tdi.state.tx.us. Questions regarding form filings can be directed to the Property and Casualty Personal Lines Division at 512-322-2266 or AutoHome@tdi.state.tx.us
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Mike Geeslin
Commissioner of Insurance