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Texas Department of Insurance
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FAQ: Auto insurance, claims, coverage issues, and more

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Do I have to have auto insurance?

Texas law says you must show proof that you can pay for accidents that you cause. Most people do this by buying auto liability insurance. Liability insurance pays for the other driver’s repairs and medical bills. If you still owe money on your car, your lender will require you to have collision and comprehensive coverage to pay for damage to your car.

What could happen if I don’t have auto insurance?

The police officer who pulls you over will likely give you a ticket. Then the court could fine you up to $350. If it happens again, you could be fined up to $1,000 and have your driver’s license suspended.

Do I need gap insurance?

Only if your car is worth less than what you owe on your car loan. Gap insurance covers the difference between what you owe on your car and what it’s worth. Cancel the policy when you owe less than your vehicle is worth. This usually takes about two years.

Learn more: Do I need gap insurance for my new car?

Can I get a discount if I take a defensive driving course?

Companies often offer discounts for completing a defensive driving or driver education course. Each company sets its own discount terms.

Will I get a refund if I cancel my auto insurance policy early?

Yes. If either you or the company cancels your policy, the company must give you a refund for the remaining months. So if you paid a full year of premiums and you cancel after one month, you’ll get 11 months’ worth of premiums back.

Will my insurance drop me if I get in a wreck?

Companies probably won’t drop you after the first wreck. But if you get in a lot of accidents or get a lot of tickets, you might be charged more. If you’ve had tickets or accidents and are trying to buy insurance, some companies might not sell you a policy. If two or more companies turn you down, your agent can get you a basic policy through the Texas Automobile Insurance Plan Association.

My company said it won’t renew my policy if I don’t respond to their calls or emails after I’m in an accident. Can they do that?

Yes. After an accident, your company will call or email you to learn what happened. Under a law passed in 2021, companies can’t renew your policy if you don’t cooperate when they reach out to you for information. This is true even if the other driver reports the claim to your insurance company.

Am I covered if I hit an animal with my car?

Yes, if you have comprehensive coverage. This is the coverage that pays for damage to your car that isn't caused by a car crash. You'll probably have to pay a deductible to get your car fixed. State law doesn’t allow your company to drop you if you file a claim for hitting an animal, but it could raise your rate when you renew your coverage.

If my friend borrows my car and gets in an accident, will my policy cover her?

Your friend will usually be covered if she has your permission, has a driver’s license, and doesn’t regularly borrow your car. But you could have an exception on your policy that says it won’t cover people who are named as excluded drivers on the policy. If you aren’t sure, ask your agent if you have this “named driver exclusion endorsement.”

Will my insurance pay for me to get a rental car?

If you have “rental reimbursement coverage” on your policy, it will pay for a rental car if your car was stolen or is being repaired because of an accident your policy covers. Some policies also pay for taxis or ride-sharing services.

Do I need to buy insurance when I rent a car?

If you have auto insurance, call your agent to see what it covers when you drive a rental car. Policies differ, but some cover damage to the rental car from a wreck or theft.

Learn more: Do I need to buy insurance when I rent a car?

Will my policy work in Mexico?

Mexico doesn’t recognize American auto insurance policies. For short trips into Mexico, some companies offer coverage that you can add to your policy. But it might not meet Mexico’s legal requirements. If you’re driving into Mexico, you should buy a Mexican liability insurance policy. Ask your agent about these policies.

Will my policy pay if someone steals things out of my car?

Your auto policy won’t. But your homeowners or renters policy might pay if you have one of those policies. If you live with your parents, their homeowners or renters policy might cover the things in your car.

If another driver caused an accident and it was their fault, will their insurance company pay or will mine?

If the accident was the other driver’s fault, their insurance should pay for your repairs. If the company refuses to pay because it doesn’t agree that its driver was at fault, you can file a claim with your own company. But you must have collision coverage – not just liability – to do this. Your company will probably try to get the other company to pay your claim. If the other company agrees to pay, you’ll probably get back the amount of your deductible.

How does the insurance company decide if my car should be totaled?

If the cost to repair your car is close to or more than its current value, the company will probably decide to total it. This means that, instead of paying to fix your car, the company will pay you the car’s value.

Learn more: My car was totaled! Now what?

Question? Call us at 800-252-3439.

Last updated: 11/17/2022