Most Texas Residents Don't Know This
Working in insurance for the last 3 years, I have noticed a commonality with most, if not all of our clients: they didn't know its state law to have auto insurance. Now I'm sure you're probably thinking "uh... duh!", but the truth is not all states require auto drivers to carry insurance. Some even offer other options for coverage than insurance. (thebalance.com has some further information on that list if you have a curious mind.)
TEXAS DRIVERS
If you're a resident and driver in the state and you have a valid driver's license, state law requires you to carry at least state minimum in liability insurance. Why? Well, lets say you loan your vehicle to a friend for a job interview because they don't own a car, and they get into an accident on their way there. Would you not want their insurance to be responsible for paying out the damages for the other person's vehicle and possible medical payments, as well as repairs to your own vehicle? If they don't have insurance, then you as the owner of your vehicle will be held responsible, or liable as the insurance companies and lawyers will say. Then your insurance rates go up due to a claim that wasn't even your fault! Sure the other person could file on their own insurance for Uninsured Motorists, but that typically isn't the case if the vehicle is loaned or borrowed.
WHAT IF I DON'T OWN A VEHICLE?
Owning a vehicle is no longer a luxury or indicator of wealth. These days it is a necessity for our daily commute, especially for those who live in rural areas and not in the cities where busses, taxis, or subways are available. However, owning a vehicle is a big expense and one that a lot of people can't afford. Unfortunately no one thinks that they still need insurance even if they don't own a vehicle. This is a big NO NO! Remember I stated earlier that in Texas, for as long as you hold an active/valid driver's license you HAVE to carry liability insurance. If you do not own a vehicle, then you will need to take out what is called a Non-Owner's Policy. This not only allows you to keep the insurance the state requires so you're on the road legally, but it also prevents you from having a surcharge placed on your policy (when you eventually get one) as penalty for a lapse in coverage. This starts from day one of receiving your driver's license. The longer you wait to get insurance, the longer your lapse will be which can potentially increase the surcharge on the policy. Don't fret though! That surcharge can be dropped after you have continuous coverage for a certain length of time.
LIABILITY VS. FULL COVERAGE
This is something that is also commonly misconstrued for auto insurance. Full coverage is not the same thing as liability insurance. Here is the simplest way to explain: liability coverage is a blanket. It covers the entire policy. This means it covers all drivers listed on the policy. Full coverage means you have the liability as well as physical damage coverage on the vehicles. This is where deductibles come into play. (There is also a deductible for uninsured/underinsured motorists, but that's a topic for another day.) When you have full coverage you have the ability to choose how high or how low you want your deductibles for the physical damage of each car. So if you have two vehicles, you may choose to have different deductibles on each one depending on its usage, and the liability stays the same on each vehicle. So the breakdown is: Liability = 1 blanket that covers the entire policy. Full coverage = individual deductibles can be changed for each vehicle.
Insurance is a big thing and understandably, very confusing. This is why you have agents to help walk you through it and determine the best policy for your specific needs. If you feel that you may have inadequate coverage, would like to inquire about coverage, or have questions about the Non-Owners policy, please do not hesitate to reach out to me or Amanda. We would love to have the opportunity to help you! Stay tuned for future posts!
Amanda Brewer
903.253.8424
Alicia Sonnamaker
903.509.3276