Most of us have heard the term “financial responsibility” at one time or another. More than likely we've used it ourselves to explain to our children the importance of getting a job, saving money and paying bills. But in the context of car insurance in Texas, proof of financial responsibility means you must provide evidence that you have the means to pay for any damages you cause while operating a motor vehicle. Most drivers satisfy this law by purchasing a car insurance policy. However, there are alternatives.
Texas Law
Texas is one of 10 states that currently follows a combination of No Fault and Tort Law systems when it comes to car accidents. That means, if you are driving a car that is involved in an accident and it is your fault, you are financially responsible and must pay for the costs of medical care for injured passengers as well as any property damage. If you cannot prove you have the means to pay for damages, you will be in violation of Texas law and will be fined. The first time, the fine can be between $175 and $350. A second offense can result in suspension of your driving license, $1,000 fine or both.
Liability Insurance
The easiest way to prove financial responsibility is to purchase a Texas car insurance policy. Liability insurance- which typically includes Bodily Injury and Property Damage coverage protects you financially in the event someone or something is damaged as a result of your driving. Texas requires drivers with insurance to meet minimum liability requirements. Currently, you must carry a minimum of $30,000 in Bodily Injury Liability for a total of $60,000 per accident and $25,000 Property Damage Liability coverage. This requirement is typically referred to as 30/60/25 coverage.
Remember, liability coverage does not protect you for damage or injuries, only those in the other vehicle. If you wish to protect yourself and your passengers, you must purchase Personal Injury Protection (PIP) or seek coverage from a health insurance policy. In addition, minimum coverage offers only minimal protection and does not provide optimal coverage. To avoid out-of-pocket expenses, you may need to purchase more coverage.
Other Methods of Proving Financial Responsibility
By Texas law, you do not have to purchase a car insurance policy to drive as long as you can provide another acceptable form of financial responsibility. A cash deposit or a cashier's check with a county judge verifying you have deposited at least $55,000 is accepted as proof of financial responsibility. As is a surety bond or a copy of a self-insurance certificate issued by the Texas Department of Public Safety.
It’s also acceptable to drive in Texas with a car insurance policy issued from another state. As long as the insurance comes from a valid, agent or company with legal authority to write liability insurance in the state and meets minimum coverage requirements, it’s fine.
There are a few alternatives to purchasing Texas auto insurance and you can drive legally in the state without it. But keep in mind, when and if you are involved in an accident, facing costly damages and high out-of-pocket expenses, a reliable, dependable insurance policy sure comes in handy.