One More Post About Minimum Auto Insurance Limits

This is the official news release from the Texas Department of Insurance about the recent increase in auto liability limits:

Minimum Auto Liability Insurance Limits to Increase on April 1

AUSTIN – The minimum amount of automobile liability insurance Texas drivers are required to carry for bodily injury/property damage will increase on April 1 from the current $20,000/$40,000/$15,000 (“20/40/15”) coverage to “25/50/25” coverage.

Texas law requires people who drive in Texas to be financially responsible for the accidents they cause. Most drivers do this by buying auto liability insurance. Liability insurance pays to repair or replace the other driver’s vehicle and pays the medical expenses of the other party; it does not pay to repair or replace the policyholder’s vehicle.

The current minimum amount of liability insurance required by law is $20,000 for each person injured in an accident, up to a total of $40,000 for everyone injured in an accident, and $15,000 for property damage per accident. The limits will increase on April 1 to $25,000 of coverage for each injured person, up to a total of $50,000 per accident, and $25,000 for property damage.

The 80^th Legislature amended the current financial responsibility law in 2007 to increase the auto liability limits amid concerns that the current limits aren’t enough to cover the costs of an accident resulting in severe injury or major vehicle damage.

The limits will increase again on January 1, 2011, to $30,000 of coverage for each injured person, up to a total of $60,000 per accident, and $25,000 for property damage per accident (30/60/25).

Drivers who carry minimum limits will begin to notice the new limits as they renew their auto policies or buy a new policy, but they won’t need to take any action unless contacted by their insurance company.

There are severe penalties for violating the state’s financial responsibility law. A first conviction will result in a fine between $175 and $350. Subsequent convictions could result in fines of $350 to $1,000, suspension of your driver’s license, and impoundment of your vehicle. The state of Texas will implement the new Texas Financial Responsibility Verification Program this spring that will allow law enforcement officers to immediately verify whether a driver has car insurance.

For more information about the new limits or automobile insurance coverage, visit the Texas Department of Insurance (TDI) resource page at http://www.tdi.state.tx.us/consumer/financialrespon.html, read TDI’s Automobile Insurance Made Easy publication at http://www.tdi.state.tx.us/pubs/consumer/cb020.html or call the Consumer Help Line at 1-800-252-3439.

Comments

[Michelle]

Wow, I can't below how low the minimum limits are in Texas. In Nova Scotia, the minimum amount of third party liability insurance that must be carried is $200,000. And yet the US that is famous for it's high personal injury awards.

Am I missing something?

[Bob Kraft]

Michelle, you're not seeing many high personal injury awards coming out of Texas!

Until this recent change, it had been many, many years since the minimum limits were raised in Texas. It became a very sad joke on injured Texans when they discovered they had $40,000 in medical bills and $30,000 in property damage, and a defendant whose auto liability policy would cover only half those damages.

The new change will help a bit, but with medical costs soaring, a $25,000 insurance policy still won't cover even the medical bills of many accident victims, to say nothing of pain and suffering.

[Eric Morrell]

Low insurance limits, for the longer term, do not save the insurer money. The lower liability limits create a need for increase coverage and premium for "under insursed" and "no insured" coverages for the auto policy holders. These coverage insure a policy holder if they are involved in an accident by a driver that does not carry the appropriate liability limits to cover the damage done to you bodily or property wise.

Many State politicians promise lower premiums by mandating lower limits on policies. This just does not work.

For more information on insurance topics come visit:

The Lower New York Insurance Blog

[Bob Kraft]

That's an excellent point Eric, and a good argument for higher limits. Unfortunately, neither accident victims nor personal injury lawyers carry much weight in most state legislatures...