So you’ve turned your attention away from the road for a moment while switching radio stations, and before you can slam on the brakes, you’ve rear-ended the car in front of you.
Aside from exchanging both personal and car insurance information with the other driver, you need to know where your state stands in terms of responsibility for the accident.
States like Texas uses a “fault” system when it comes to auto insurance. According to the Texas Department of Insurance, this means that you are responsible for covering any damage in an accident that you cause. Conversely, “no-fault” states require the insurer to pay, regardless of who caused the collision.
After a collision in a “fault” state like Texas, a driver, passenger or pedestrian who suffered an injury from the crash can file a claim with his or her own auto insurance first in what is known as a “first-party” claim. The injured person may also decide to seek compensation from your insurer, by filing a “third-party” claim (the “second party” is always the insurance company). An injured person may also choose to go to court and file a lawsuit in order to prove fault and seek monetary damages for injuries, property damage and other losses related to the accident.
Your liability coverage will pay, up to its stated limits, to fix or substitute the other driver’s vehicle and reimburse the medical expenses they incur as a result of an accident you cause.
In Texas, you must have insurance to satisfy the financial responsibility law. Most people buy liability car insurance to fulfill this. Your policy must meet the minimum liability limits as follows:
- $30,000 for bodily injury per each injured person
- $25,000 for property damage
- $60,000 for injuries per accident
Liability coverage usually pays for medical bills, property damage bills, and other costs if you are found to be at fault for an accident in which another person is injured, or their property is damaged. It covers you and your family members as well as other people driving your car with your permission.
While Texas only mandates you have liability insurance, there are other additional variations of car insurance coverage available to aid you financially, which include:
- A surety bond from two individual sureties that own property in Texas, with the same coverage limitations as liability insurance
- $55,000 cash or securities deposit with the state Comptroller
- $55,000 cash or cashier’s check deposit with the county judge of the county in which your car is registered
- Certificate of self-insurance: you must own more than 25 cars to qualify for this certificate
If you are unable to provide proof of financial responsibility after an accident, the penalties can range from $175 to $350 for a first conviction, and from $350 to $1000 in fines for subsequent convictions. In addition, there is a possibility your driver’s license can be revoked and your car impounded.