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Mandatory Minimum Liability Coverage for Auto Policies Increases in Texas

February 25, 2011 /24-7PressRelease/ -- Texans may have recently noticed their automobile insurance premiums rise. As of January 1, 2011, the state has increased the mandatory minimum liability coverage for auto policies.

Jerry Hagins of the Department of Insurance said policy holders should see an increase of about two to three percent on their policy. Charles Law, an insurance agent, told KBTX that most customers would see about a $40 increase per year on their motor vehicle insurance.

Minimum Auto Liability Coverage

The Texas Department of Insurance reported that liability coverage needed to increase because the previous liability limits no longer paid for all expenses after an automobile accident. Minimum liability coverage rates had not been adjusted since 1983. This new increase was called for in a 2007 law which directed increases in January 2011.

In Texas, liability insurance provides coverage for some or all of the medical expenses of the driver who is not at fault in an auto accident; this coverage is also used to make payments to repair or replace the vehicle of the driver who is not at fault. The at-fault driver is not covered by liability insurance for medical bills or property damage. Unless there is other insurance in place, the at-fault driver is responsible for his or her medical and property repair expenses out-of-pocket.

Previously, drivers were required to carry 25/50/25 coverage - or minimum liability limits of $25,000 for each injured person and $50,000 per accident, and $25,000 for property damage per accident. Those minimum limits have now been increased to $30,000 for each insured person and $60,000 per accident; property damage limits remain at $25,000.

Protecting Texas Auto Accident Victims

Consumer group Texas Watch supports the increase in coverage, saying that drivers should be sure their insurance policies are sufficient to completely cover their liability if they are in an accident.

Jeff Weinstein, a car and truck wreck lawyer, agreed that this is a good move in the right direction. A simple car wreck can result in thousands of dollars in medical bills and, in many cases, $30,000 does not even go very far today in paying all the expenses that an innocent victim can incur from a simple car wreck. Wrecks that cause more serious injuries or even death can easily exceed these minimum limits. Weinstein says that not only should families consider raising liability limits above the minimum, they should also consider raising uninsured motorist limits to account for the one in five Texans that are driving without any liability insurance.

The insurance industry appears to be largely satisfied as well. Mark Hanna of the Insurance Council of Texas says the additional coverage insulates motorists from the increases in the costs of automobile repair and emergency medical services.

However, Justin Weaver, an auto policy holder, lamented to KBTX that he already pays enough bills and was not looking forward to rate hikes if he would not see a direct benefit. For some though, there are other considerations. Eric Marion said in a difficult economy, he is not taking any chances. "I have full coverage because I have a little girl," and "[a] lot of people don't even have liability on the road."

Industry data indicates that roughly 7.5 million, or half, of all Texas vehicles are minimally insured with liability coverage, and approximately 20 percent are uninsured. Uninsured drivers risk financial ruin from a serious car accident. Even those with minimum liability coverage can face personal liability after policy limits are exceeded if there are extensive injuries, more than one accident victim or substantial property damage.

Underinsured or uninsured motorists also pose a financial threat to other drivers. Unless the uninsured driver has the ability to pay for medical expenses or property damage, the victim may initially have to look to his or her own insurance or own finances to cover bills. Anna Eicher knows well how quickly a liability policy limit may be usurped. A single accident in 2008 left three dead and 12 injured, including Eicher, an Amish woman who refused to sue the distracted truck driver who caused the crash. The carrier's liability insurance limit of $1 million was quickly reached and exceeded because of the large accident. Although the medical center wrote off her hospital fees, which totaled more than $23,000, as a charity deduction, she still ended up owing thousands to a radiology group and chiropractor.

Those who have been in a car accident should contact a motor vehicle accident lawyer to discuss the crash. There are important investigative, evaluative and legal steps to take in order to protect any claim for damages that may exist. Compensation for immediate and ongoing medical expenses will allow an accident victim to concentrate on treatment and healing.

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