Texas Department of Insurance
Young Drivers Auto Insurance FAQ
See Also: Young Texans´ Insurance Resource Page | How Insurance Works | General Insurance FAQYoung Drivers´ Frequently Asked Questions:
- Do I have to have auto insurance?
- Who pays to fix my car?
- What other coverages should I consider?
- What will happen if I don´t have auto insurance?
- Can I get a driver´s license if I don´t have an auto policy?
- When do I have to show proof that I have auto insurance?
- How are auto insurance rates determined?
- How do companies decide what kind of risk I might pose for an accident?
- What is the average monthly auto insurance premium?
- How can I lower my premium?
- Can I buy insurance at a car dealership?
- If I have an accident while driving a friend´s car, will my policy pay? What if my friend has a wreck while driving my car?
- If I get in a wreck and the total damage is higher than my policy´s dollar limits, will the insurance company still cover me?
- Can a company cancel or refuse to renew my policy if I get a speeding ticket?
- What if I can´t find a company that will sell me insurance?
Texas law requires drivers to be able to pay for the accidents they cause. Most people meet this requirement by buying automobile "liability" insurance. Liability insurance pays to treat people injured in an accident that you cause. It also pays to repair or replace the other driver´s damaged property.
You must have enough liability insurance to pay up to $30,000 in medical expenses for each person injured in an accident, up to a combined total of $60,000 for everyone who was hurt in an accident. You also must have at least $25,000 in coverage to pay to repair or replace the other driver´s car. Because of these coverage amounts, basic minimum liability coverage is often called "30/60/25 coverage."
Medical care and vehicle repair or replacement costs can be expensive. Therefore, minimum coverage might not be enough to cover your financial obligations if you cause a serious accident. It´s a good idea to consider raising your coverage limits. Raising your coverage limits will raise your policy premium, however.
2. Who pays to fix my car?
Liability insurance pays to repair or pay for the other driver´s car. It won´t pay to fix your car, however. You will need to add "collision" coverage to your policy to pay to fix your car if it´s damaged in a wreck that you caused. "Comprehensive" coverage pays to repair or replace your car if it´s stolen or damaged by hail, fire, road debris, vandalism, or other similar covered risks. Texas law does not require you to have collision and comprehensive coverage. However, if you still owe money on your car, your lender will probably require you to have them. If your car is damaged in a wreck caused by another driver, the other driver´s insurance will pay to fix your car, up to the other driver´s policy limits.
3. What other coverages should I consider?
You might also wish to add "Personal Injury Protection," commonly called PIP. PIP will pay for your and your passenger´s medical expenses and will replace some lost wages if you´re unable to work because of an accident. "Uninsured/Underinsured Motorist" (UM/UIM) coverage pays your expenses from an accident caused by a driver who doesn´t have insurance or doesn´t have enough insurance to cover your bills, up to your policy´s dollar limits. UM/UIM also pays for accidents caused by a hit-and-run driver if you report the accident promptly to the police.
4. What will happen if I don´t have auto insurance?
Driving without auto insurance is against the law. A law enforcement officer will require you to show proof that you have auto insurance during any traffic stop. Your insurance company will provide you with an "insurance card" that will qualify as proof as insurance. The card will explain the basic features of your auto policy, including the dates the coverage begins and ends. You should keep your insurance card with you while driving.
If you are unable to show proof of insurance, you will probably get a ticket. You could face a fine of $175 to $350 for a first offense. If you are stopped again without proof of insurance, you could be fined up to $1,000, your vehicle could be impounded for 180 days, and you could have your driver´s license suspended.
The financial consequences of driving without insurance can be even more severe. If you cause an accident, you will be financially liable for any resulting injuries or property damage. In the event of a serious accident, you could have to pay tens of thousands of dollars out of your own pocket. If you can´t pay the amount you owe, you could be sued, and a court could order that the money be deducted from your current and future earnings. In addition, it could mean that a person you´ve injured will have difficulty getting the medical care necessary for a complete recovery.
5. Can I get a driver´s license if I don´t have an auto policy?
No. All applicants for a Texas driver´s license must show proof of insurance to get a driver´s license. You´ll have to show proof of insurance regardless of whether you´re getting a driver´s license for the first time, renewing your driver´s license, or getting a Texas driver´s license after moving from another state.
6. When do I have to show proof that I have auto insurance?
You have to show proof of insurance any time a law enforcement officer asks you to. A law enforcement officer will ask you for proof of insurance if you´re involved in an accident, regardless of whether you caused the accident or not. Police will also ask you for proof of insurance if you´re stopped because of a traffic violation or for any other reason. You also have to show proof of insurance when you get or renew your driver´s license, register your car, and get your car inspected.
7. How are auto insurance rates determined?
In general, companies base their rates on their estimate of the likelihood that you will be involved in an accident. Statistics show that younger drivers are more likely to be involved in accidents than older, more experienced drivers. Therefore, rates for younger drivers will usually be more expensive. If you have collision and comprehensive coverage on your policy, the kind of car you drive will also affect your rates. Expensive cars and cars built for speed are more expensive to insure. Likewise, cars with safety or anti-theft features are usually less expensive to insure.
Each insurance company has its own method for determining your risk. It is unlikely that any two companies will calculate your risk to be the same or offer you an identical rate. Some companies may decide that you´re too great a risk and refuse to sell you a policy. If that happens, keep shopping. Since companies calculate risk differently, you may be able to find another company willing to insure you. Rates can vary greatly from one company to the next, so shopping around can also help save you money.
8. How do companies decide what kind of risk I might pose for an accident?
Each company evaluates risk differently. All companies generally use some type of formula that considers a variety of "risk factors." These factors include:
- Driving history. One of the most important indicators of the way you will drive in the future is the way you´ve driven in the past. If you´ve previously caused an accident, an insurance company might reasonably assume that you could cause another accident in the future. Companies also will consider whether you´ve gotten any speeding tickets or other moving violations. If you have accidents or tickets on your driving record, you will pay more for insurance. If you have multiple accidents or tickets, some companies may refuse to sell you a policy.
- Age. Statistics show that young, inexperienced drivers are more likely to cause accidents. As a result, younger drivers, especially teenagers, pay higher rates for auto insurance. Insurance rates for good drivers generally drop considerably after age 25.
- Gender. At younger ages, male drivers are statistically more likely to be involved in an auto accident than female drivers are. Therefore, younger male drivers tend to pay higher rates. After age 30, the accident risk of male and female drivers is generally considered equal.
- Lifestyle. People who are married or have children tend to be involved in fewer accidents and generally pay lower rates.
- Credit history. Statistics show that drivers with poor credit histories tend to have more accident claims than drivers with good credit. Many, but not all, insurers use credit scores to help determine a driver´s accident risk. If you haven´t had time to develop a credit history because of your age, insurance companies generally won´t count your lack of history against you. However, most companies will consider your credit history in the future when you renew a policy or change companies. Therefore, maintaining a good credit history by paying your bills on time and avoiding excess debt can result in lower auto insurance rates.
Your premium will vary according to your individual circumstances. Therefore, it´s impossible to list a meaningful "average" premium. To get an idea of what you can expect to pay for auto insurance, view our Automobile Insurance Price Comparisons. Compare the price estimates for the driver profile that most closely matches your situation.
10. How can I lower my premium?
The best way to lower your premium is to be a safe driver. Companies offer the best rates to drivers without accidents, speeding tickets, and other traffic violations.
Here are some other tips to help you save money:
- Ask about discounts. Insurers often provide discounts to customers who meet certain criteria. For instance, some companies may offer discounts if you make good grades in school or drive a car with safety and anti-theft features. Ask your insurance agent whether the company offers discounts and if you qualify.
- Drive a safe vehicle. Insurance rates are higher for convertibles and sports cars because they tend to be driven at higher speeds and often provide occupants with less protection than other types of cars. Driving a car with safety features such as anti-lock brakes and air bags will likely lower your premium.
- Consider higher deductibles. Your deductible is the amount you must pay out of your own pocket before the insurance company will pay. For instance, if your policy has a $250 deductible, and you cause a wreck that results in $1,000 in damages, you´ll have to pay $250, and then your insurance company will pay the remaining $750. Policies with higher deductibles tend to be cheaper because the company will pay a smaller share of any loss. But remember, although your premiums will be lower if you raise your deductible, you´ll have to pay more out-of-pocket if you have a claim.
No. In Texas, insurance may only be sold by an insurance agent or broker licensed by the Texas Department of Insurance (TDI). (Back to top)
12. If I have an accident while driving a friend´s car, will my policy pay? What if my friend has a wreck while driving my car?
In most cases, the vehicle owner´s insurance pays for losses, regardless of who was driving. This means that if you´re in wreck while driving a friend´s car, your friend´s policy will usually pay. If you have an auto policy, your insurance would pay any remaining amount that exceeds your friend´s policy limits. If your friend does not have insurance and you´re involved in an accident while driving his or her car, your policy will pay. Likewise, if a friend has an accident while driving your car, your policy will pay first, and your friend´s policy will pay any remaining amount that exceeds your policy limits. If you do not have insurance and your friend is involved in an accident while driving your car, your friend´s policy will pay.
13. If I get in a wreck and the total damage is higher than my policy´s dollar limits, will the insurance company still cover me?
The insurance company will only pay up to the amount of your policy´s dollar limit. This means that if your policy´s property damage limit is $15,000, the company will only pay $15,000 to fix the other driver´s car. You will have to pay the rest yourself. The minimum liability coverage requirements might not be enough to meet your financial obligations if you´re involved in a serious wreck. It´s a good idea to consider buying a policy with more than the minimum required coverage limits.
14. Can a company cancel or refuse to renew my policy if I get a speeding ticket?
Yes. Companies will consider your driving record, including any wrecks you´ve caused and tickets you´ve gotten, to decide whether to issue you a policy. Most insurers routinely check the state database of traffic citations to verify that their policyholders have not received any unreported citations.
An insurer may cancel your auto policy within 60 days of your initial purchase for any reason. Therefore, if you get a ticket within this timeframe, your insurer could decide to cancel your coverage. After 60 days, your insurer generally may not cancel your coverage unless you failed to pay your premium or committed insurance fraud. However, your insurer could decline to renew your coverage if you received a ticket during the previous policy term.
Most companies generally won´t cancel or refuse to renew your policy for a single ticket. You can expect the company to raise your rates when your policy is renewed, however. Receiving multiple tickets significantly increases your chances that a company will decide not to renew your policy when it expires.
If you´re convicted of driving under the influence (DUI) or driving while intoxicated (DWI), you can expect to pay considerably higher rates. These convictions could also cause your insurer to decline to renew your coverage. Most insurers consider your driving record for the previous three years. Companies usually consider any DUI or DWI convictions you received in the previous five to seven years.
Most law enforcement jurisdictions in Texas will allow you to take a certified, six-hour defensive driving course to remove tickets from your driving record. Generally, you can only take defensive driving once a year to remove one ticket. You may not take defensive driving to remove tickets for DUI, DWI, or for speeding more than 25 miles per hour the posted limit. You must pay to take the course. However, taking defensive driving may eliminate or reduce the fine.
15. What if I can´t find a company that will sell me insurance?
If an insurer turns you down or declines to renew your coverage, keep shopping. Companies use different methods to determine your risk. Some companies may be willing to insure you, even though other companies have turned you down.
You might want to shop with an independent insurance agent. Independent agents usually represent multiple companies. This can help you save time since you can find out about several companies with one call, rather than calling each company individually.
If you are still unable to find coverage, you can purchase a policy from the Texas Auto Insurance Plan Association (TAIPA). TAIPA is a special risk pool that provides coverage for drivers who are unable to find companies willing to insure them in the standard market. TAIPA´s premium rates are high sometimes as much as double a standard insurance policy.
A TAIPA policy will satisfy the state´s minimum coverage requirements. You may also buy personal injury coverage that will pay your and your passenger´s medical costs, up to the policy´s limits, regardless of who is at fault for an accident. You may also purchase uninsured motorist protection. This coverage pays for your damages caused by a driver who doesn´t have insurance. TAIPA does not issue other types of auto coverage, such as comprehensive and collision coverage.
To be eligible for TAIPA, you must sign an affidavit stating that you have been denied auto coverage from two insurers within the last six months. You must be a Texas resident and have a valid driver´s license. For more information, contact TAIPA
1-800-580-8247
444-4441 in Austin
www.taipa.org
Contact Information and Other Helpful Links
Translation by WorldLingo
Insurance Resource Page for Texas Teens and Young Adults
See Also: How Insurance Works | General Insurance FAQ | Auto Insurance FAQInsurance provides financial protection from accidents and other unexpected events. Different kinds of policies insure against different "risks," which might include a traffic accident that damages your car, an apartment fire that destroys your personal property, or an illness or injury that requires expensive medical treatment.
In general, the insurance needs of people under age 25 are more limited than people who are older. For instance, you may already have some types of coverage through a parent's or guardian´s policy. However, one type of policy you are almost certain to need is auto insurance.
This page provides information about auto insurance, renters insurance, and health care coverage for younger Texans. In addition, the following Texas Department of Insurance (TDI) resources can help you understand key topics and issues relating to insurance coverage:
- How Insurance Works explains the basic terms and key concepts that are common to all types of insurance
- Frequently Asked Questions answers a number of questions that teens and young adults generally have regarding insurance
- Glossary of Insurance Terms provides definitions for common insurance terms
- Shopping Smart provides information to help you shop for the insurance you need
- Helping You With Your Insurance Complaint explains what you need to do if you have a problem with your insurance company and what TDI can do to help.
- TDI Working For You provides an overview of TDI and helpful contact information.
Auto Insurance
Texas law requires all drivers to have auto liability coverage to pay for any property damage and injury to others that results from any accidents they cause. A first offense for driving without insurance can result in a court fine of between $175 and $350. Subsequent offenses can result in court fines up to $1,000, license suspension, and impoundment of your vehicle. In addition, if you are convicted of driving without insurance, you will have to pay an annual surcharge of $250 to the Texas Department of Public Safety (DPS) in order to maintain your Texas drivers license. The surcharge remains in effect for three years, meaning a first offense could ultimately cost you more than $1,000.Your insurance company will provide you with a card or certificate as "proof of insurance" at the beginning of each policy term. You will be required to show proof of insurance when you
- Are asked for it by a police officer or other law enforcement official.
- Have an accident.
- Register the title to your car or renew its registration.
- Obtain or renew your driver´s license.
- Have your vehicle inspected during an annual required state safety inspection.
It´s also important to understand that basic liability coverage pays only for the damages and injuries you cause to other people. It won´t pay to repair or replace your car. To have coverage for your vehicle in an accident regardless of who´s at fault, you will need to add "collision" coverage to your policy. You can buy "comprehensive" coverage to pay to repair or replace your car if it´s stolen or damaged by hail, fire, road debris, vandalism, or other similar covered risks. You might also wish to add "Personal Injury Protection," commonly called PIP. PIP will pay for your and your passenger's medical and medically related expenses and will replace some lost wages if you´re unable to work because of an accident. "Uninsured/Underinsured Motorist" (UM/UIM) coverage pays your expenses from an accident caused by an uninsured motorist or if the other driver did not have enough insurance to cover your bills, up to your policy´s dollar limits. UM/UIM also pays for accidents caused by a hit-and-run driver if you reported the accident promptly to the police.
The following TDI resources can help you better understand and shop for auto insurance:
- Auto Insurance FAQ for young Texas drivers.
- Automobile Insurance Made Easy is TDI´s consumer publication that covers a wide range of auto-insurance-related topics.
- Automobile Insurance Price Comparisons provides price quotes and contact information from most Texas insurers, including quotes for drivers under 25.
Renters Insurance
If you live in a rented home or apartment, you may need to buy renter´s insurance to cover your personal property in the event of fire, theft, or other covered loss. Your landlord´s insurance won´t pay to repair or replace your property.Typically, renters insurance costs $30 or less per month, although you should expect to pay more if you have a lot of expensive items. An "actual cash value" renters policy will pay for a property loss in the amount of the resale value of the item at the time the loss occurred. In other words, if your two-year-old computer is damaged by water from a broken pipe, the policy will only reimburse you for the value of a two-year-old computer -- not a new one. However a "replacement value policy" will reimburse you for the amount needed to purchase a new item of like kind and quality to the one that you need to replace. Replacement value policies cost more than actual cash value policies because they pay more for the losses you incur.
Renters insurance essentially covers everything a homeowners policy does, except for the value of the rented structure. Many renters policies will pay for the cost of a place for you to stay temporarily if the damage to your property makes your home uninhabitable. A renters policy also protects you from legal liability in the event that someone has an accident and is injured on your property. In addition, many renters policies even cover property losses that occur off the rented premises, up to a certain limit, such as lost luggage or a stolen camera on vacation.
If you´re away at school, your personal property may be covered by your parent's or guardian´s homeowners policy and you don´t need a separate renters policy. Make sure your parents review their policy carefully to determine whether your property is covered while you´re living away from home and what the limit of the coverage is. It´s a good idea for them to check with their insurance agent to verify the coverage.
The following TDI resources offer more in-depth information relating to renters insurance:
- Renters Insurance provides general information on renters insurance.
Health Care Coverage
Health care coverage pays for the cost of medical services as a result of illness or injury. Younger people often forgo health insurance because they´re in good health and expect to be so for a long time. However, although it is true that younger individuals are less likely to have a serious illness, it can occur. Moreover, a serious physical injury as a result of an accident can happen to anybody at any time.If your parents have health care coverage and you still depend on them for financial support, more than likely you will also be covered under their policy. Dependent children may remain enrolled in a parent´s health plan up to age 25. If your parents are without health coverage, you should consider obtaining a policy of your own. Because younger people can generally be expected to remain in good health, health coverage generally costs significantly less for them than for people who are older. If you´re a college student, find out whether your institution offers a student health plan. The majority of larger colleges and universities offer some type of affordable health coverage.
In some cases, colleges may require you to have health care coverage as a condition of enrollment.
Health care coverage can be an extremely complex topic. In general, however, if you´re purchasing an individual policy directly from an insurer, shop around with multiple companies for the best available coverage at the best price. Always read a policy before purchase, and carefully consider whether it meets your health care needs.
The following TDI resources can help you better understand how health coverage works and help you find a policy that's right for you:
- TexasHealthOptions.com is a web site administered by TDI that provides a step-by-step approach to finding health coverage. There´s a page devoted specifically for college students.
- Your Health Care Coverage explains the many aspects of health care coverage in detail, including the differences between managed care and indemnity coverage and group and individual health plans.
- Health Maintenance Organizations provides detailed information about Health Maintenance Organizations (HMOs), which utilize special networks of hospitals, physicians, and service providers.
Contact Information and Other Helpful Links
Translation by WorldLingo
Texas Department of Insurance
Young Texans Insurance FAQ
See also: Young Texans' Insurance Overview | How Insurance Works | Auto Insurance FAQYoung Texans´ frequently asked questions about insurance:
- How much insurance do I need?
- What is a deductible?
- How do I shop for insurance?
- How are rates determined?
- How long does an insurance policy last?
- Can I pay my premiums monthly?
- What happens if I don´t pay my premium?
- Can I get arrested or sued if I don´t have insurance?
It may be hard to determine exactly how much insurance you need. In general, however, you should make your decision based on two key considerations:
- How much is what you´re insuring worth?
- How much can you afford to pay out of your own pocket to repair or replace your property?
2. What is a deductible?
A deductible is the amount you must pay yourself toward the repair or replacement of your damaged property before the insurance company will pay. For example, assume you have an auto policy with comprehensive coverage and a $500 deductible. If your car is damaged in a hailstorm and the repair bill is $2,000, you´ll have to pay $500 toward the repairs. The insurance company will then pay the remaining $1,500. If the damages totaled $500 or less, you would have to pay the full amount yourself. Most types of insurance policies require you to pay a deductible. The higher the deductible, the lower your premiums will likely be. If you have a claim, however, you´ll have to pay more out of your own pocket. Make sure you know how much you can reasonably afford to pay if you have a claim before choosing a deductible amount.
3. How do I shop for insurance?
You should always get quotes from several companies before buying an insurance policy. Rates often vary significantly from one company to another.
Use TDI´s Automobile Insurance Price Comparisons and Homeowners Insurance Price Comparisons to help you shop. The price comparisons list licensed companies that sell insurance in your area and give estimates of what companies might charge. Also included are contact information, financial ratings from an independent rating organization, and complaint indexes for each of the companies. This information can help you choose companies that are financially sound and have a good customer service record.
It´s important to buy from licensed companies. You can learn whether an agent or company is licensed by using the Agent Search and Insurer Search features on our website. You may also call the TDI's Consumer Help Line
1-800-252-3439Also, it´s a good idea to get recommendations about insurance companies and agents from family and friends.
463-6515 in Austin
If a company turns you down, keep shopping. Insurance companies have different criteria for deciding which applicants to accept and what rate to charge. You may be able to find a company willing to accept you, even if others won´t.
4. How are rates determined?
Insurance rates are usually determined based on the likelihood that a company will have to pay a claim on a policy and how much the company might have to pay.
Insurance companies use a process called "underwriting" to assess your likelihood of suffering a covered loss during the course of the policy term. Underwriting evaluates a variety of "risk factors" that, taken as a whole, provide an indication of someone´s statistical probability of suffering a loss. Some of the most common risk factors companies consider for various lines of insurance include:
- Automobile insurance. Insurers usually consider a driver´s age, gender, driving history, type of vehicle, and credit score. Younger drivers, and especially young males, are generally at a higher risk of having an auto accident. Drivers with tickets or accidents and drivers of sports cars are also generally considered a higher risk.
- Homeowners / renters insurance. Fire risk is generally the primary risk factor for policies that cover homes and personal property inside a dwelling. Homes constructed of fire-resistant building materials and in urban areas with good local fire protection will generally be assessed as a lower risk. Homes in areas prone to hurricanes, hail, or windstorms will generally be assessed as a higher risk for homeowners insurance.
- Health care coverage. A policy applicant´s age, medical history, and current health status are some of the primary risk factors considered. Older people with a history of poor health are generally considered a greater risk than younger people with no health problems.
Insurance policies typically provide coverage for one year or six months. You must pay your premiums to keep your coverage in force during the policy period. At each renewal term, you should expect the insurance company to re-evaluate the risk factors that determine your policy rate. If you filed a claim for a loss during the previous term, or if your personal circumstances have changed in ways that increase your future risk, expect your rate to increase. When the company sends you a renewal notice, it´s a good time to review your coverage and consider adding additional coverages or eliminating any coverages you don´t need. It´s also a good time to shop around to see whether you can find a better deal. However, if you decide to change companies, make sure your new policy is in effect before the old one expires. Letting a policy lapse leaves you unprotected. In addition, most companies will charge you a higher premium, and some might refuse to sell you a policy, if you had any previous lapses in coverage.
6. Can I pay my premiums monthly?
Yes. If you pay in installments, your insurer will usually add an additional fee to cover the administrative cost of processing multiple payments. Some insurers may also offer you a discount if you pay your entire premium in one lump sum. If you pay your entire policy premium up front, the insurer must refund any unearned premium if you or the company cancels your policy before the policy term is up. For instance, if you pay your premium for a six-month policy in a lump sum but then cancel it after four months, the company must refund the final two months of premium to you.
7. What happens if I don´t pay my premium?
If you don´t pay your premium, your insurance company will cancel your policy and you will no longer have coverage. The insurer must generally provide written notice of cancellation due to nonpayment at least 14 days prior to the cancellation date. If a company cancels you for nonpayment, it could cost you extra in the long run. Texas law allows insurers to charge more to policyholders who have had gaps in their insurance coverage. It´s important to make sure your policy stays in force. Texas requires all drivers in the state to maintain auto liability insurance at all times. If you´re caught driving without insurance, the penalties can be stiff. Also, it´s important to remember that if you still owe money on your car or house, your lender will generally require you to have insurance. If you cancel your coverage or the insurance company cancels it, the insurer will notify your lender. The lender will then buy its own policy and will increase your payments to cover the costs.
8. Can I get arrested or sued if I don´t have insurance?
Texas law requires drivers to be able to pay for any accidents they cause. Most drivers do this by buying auto liability insurance. You´ll have to show proof of financial responsibility when you obtain or renew your drivers license, when you have your vehicle inspected, and whenever you´re asked for it by a law enforcement officer. Your insurer will give you a card that shows that you have the minimum amount of insurance required by the state. Driving without insurance can result in a fine or jail time.
Banks typically require mortgage recipients to maintain homeowners insurance as a condition of any home loan. If you fail to maintain a homeowners policy, the bank could take legal action.
Insurance also helps protect you from having to pay damages from certain types of lawsuits. For example, homeowners and renters policies will usually pay in the event that a visitor is injured on your property and sues you. If you don´t have insurance and you´re sued, you could be liable for paying any damage awards or settlements yourself.
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