Automobile Insurance Made Easy (Revised September 1999) Introduction What Auto Insurance Pays? Lowering Your Auto Insurance Costs Insurance on the Installment Plan Losing Your Insurance Auto Insurance for "High-Risk" Drivers After the Accident...What Now? Automobile Insurance for Young Drivers Getting Help For More Information Introduction Return to Index Texas law requires you to have auto insurance, and if you still owe money on your vehicle, your lender demands it. You probably have auto insurance, but do you know the answers to these questions: Who is covered by my policy? Is my insurance good in Mexico? Does my policy pay for damage to a rental car? How can I protect my rights if my car is totaled in an accident? How do accidents and tickets affect my premium? This brochure answers these and other commonly asked questions about car insurance. Texas has an auto insurance Consumer Bill of Rights. Your company must send a copy with your policy or policy renewal. Take time to read it. What Auto Insurance Pays Return to Index An auto insurance policy pays for damages, injuries, and other losses specifically covered by the policy. Some coverages - such as liability insurance - are required, while others are purely optional. This chapter describes Texas insurance requirements and explains what your policy covers. It does not take the place of reading your policy. When reading your policy, pay special attention to the exclusions, which describe things your policy doesn't cover. What are Texas' legal requirements for auto insurance? You must show you can pay for accidents you cause. Most Texas drivers do this by buying auto liability insurance. The law requires minimum coverage of $20,000 per injured person, up to a total of $40,000 for everyone hurt in an accident, and 5,000 for property damage. This basic coverage is called 20/40/15 for short. Basic coverage might not be enough if you are held liable for an accident. With rising medical costs and higher automobile prices, you should consider buying more than the basic limits. How do I prove I have insurance? Your insurance company will send you a proof-of-insurance card listing the covered automobiles and drivers and showing the policy number and expiration date. Your policy or a temporary binder also is acceptable evidence of insurance. When must I show proof of insurance? Proof of financial responsibility must be shown when you are asked for it by a law enforcement officer have an accident register your car or renew its registration obtain or renew a drivers license get your car inspected. What are the penalties for driving without liability insurance? Texas law provides severe penalties for violating financial responsibility laws: First Conviction: 75 to $350 fine Subsequent Convictions: $350 to ,000 fine, driver's license suspension and impoundment of your automobile. Do I need to change my liability coverage to meet the requirements of other s where I plan to travel? No. Your Texas policy automatically meets the requirements of other s and Canada. The "Declarations" Page The front page of your policy is called the Declarations page. It contains useful information such as the exact name of your insurance company the policy number your coverages and how much they cost Your deductibles, if you have any the vehicles insured on the policy, their vehicle identification numbers, and their classifications for rating purposes. It is a good idea to have the Declarations page in front of you when calling or writing the insurance company or the Texas Department of Insurance (TDI) about your policy. What do the coverages listed on my policy actually do? The Texas Personal Automobile Policy offers eight common types of coverage. You select and pay for each coverage you want. The eight types of coverage are: 1. Liability Pays: Other people's expenses for accidents caused by caused by drivers covered under your policy. This is the only auto insurance required by Texas law. The insurance company will pay amounts for which you are legally responsible, up to your policy's dollar limits. These may include the other party's medical and funeral costs, lost wages, and compensation for pain and suffering car repair or replacement costs and auto rental punitive damages awarded by a court. Liability also pays attorney fees if you are sued and bail up to $250 if you are arrested. Covers: You, your family members, and anybody else driving with your permission, even if they don't have their own liability insurance. You and your family members also are covered when driving other people's automobiles - including rental cars - but not non-owned cars regularly available to you such as a company car. 2. Medical Payments Pays: Medical and funeral bills arising from motor vehicle accidents, including those in which the victim was a pedestrian or a bicyclist. Covers: You, your family members, and passengers in your car, regardless of who caused the accident. You can't collect from both your medical payments and your uninsured motorist/underinsured motorist coverages for the same medical bills. 3. Personal Injury Protection (PIP)Pays: Same as Medical Payments, plus: 80 percent of lost income the cost of hiring someone to take on the household and caregiver responsibilities of an injured person. Covers: Same people as Medical Payments. An insurance company must offer you $2,500 in PIP, but you can buy more. If you don't want PIP, you must reject it in writing. 4. Uninsured/Underinsured Motorist (UM/UIM) Pays: Your losses from an accident caused by a hit-and-run driver or an uninsured motorist, up to your policy's dollar limits. Also pays if the other driver did not have enough insurance to cover all your expenses. Bodily injury UM/UIM pays without deductibles for medical bills, lost wages, pain and suffering, disfigurement, and permanent or partial disability. Property damage UM/UIM pays for auto repairs, a rental car, and damage to items carried in your car. There is an automatic $250 deductible. This means you must pay up to $250 of the repairs yourself. Covers: You, your family members, passengers in your car and anybody driving with your permission. Insurers must offer UM/UIM coverage, but you can reject this coverage in writing. Note-Your UM/UIM insurance pays for a hit-and-run accident only if you promptly report it to the police. 5. Collision (Damage to Your Car) Pays: Cost of fixing or replacing your car after an accident, regardless of who was driving or who was to blame. Coverage Limit: Payment is limited to your car's actual cash value, minus your deductible. Actual cash value is the market value of a car like yours before it was damaged. To lower your premiums, you might consider dropping this coverage if you have an older car that is paid for. 6. Comprehensive (Physical Damage Other than Collision) Pays: Cost of replacing or fixing your car if it is stolen or damaged by fire, vandalism, hail, or another cause other than collision. Comprehensive coverage also pays for a rental car or other temporary transportation if your car is stolen. Coverage Limit: Payment is limited to your car's actual cash value, minus your deductible. Caution - Your policy won't pay for auto theft unless you report it to the police. 7. Towing and Labor Pays: Towing charges when your car can't be driven. Also pays labor charges, such as changing a tire, at the place where your car broke down. 8. Rental Reimbursement Pays: A set daily amount for a rental car if your car is stolen or is being fixed because of damage covered by your auto policy. Available Coverages Texas Personal Automobile Policy Type of Coverage Pays For Covers Required? Liability Other people's medical expenses and auto repairs, attorney fees, and $250 bail You, your family and others driving with your permission By law Uninsured/Under-insured Motorist Medical and funeral expenses, car repairs, car rental and replacement of damaged contents You, your family and your passengers No, but company must offer Medical payments Medical and funeral expenses You, your family and your passengers No Personal Injury Protection (PIP) Medical and funeral expenses, lost wages, homemaker/caregiver services You, your family and your passengers No, but company must offer Collision Car repair or replacement after an accident Your car - regardless of driver By lenders Comprehensive (Physical Damage other than Collision) Car repair or replacement after fire, hailstorm, theft or other non-collision event; rental car after theft Your car By lenders Towing & Labor Towing and labor charges when your car is disabled Your car No Rental Reimbursement A rental car if your auto is undergoing repair for covered damage You and your family members No What family members are covered by my personal auto policy? Your personal auto policy covers your spouse, blood relatives, in-laws, adopted children, wards, and foster children living in your home - even if not named on the policy. "Spouse" includes a spouse living elsewhere during a marital separation. Also covered are family members attending school away from home. Do I need to buy special coverage when renting a car? Auto rental agencies offer collision damage waivers as well as liability policies, which offer separate types of coverage to the renter. The collision damage waiver is not insurance; it is an agreement that the rental company will give up, or waive, its right to recover costs of property damage to the auto from the renter with certain exceptions, regardless of who is at fault. You might not need this extra expense because your auto liability policy already covers such damage. This coverage limit, however, might be less than the value of a rental car. If you rent cars often, it may cost less to raise the liability limit on your auto policy rather than buying collision damage waivers each time you rent. The Texas Automobile Rental Liability Policy provides liability insurance for renters who do not have a personal auto policy. Texas law requires liability coverage for all drivers in Texas. It pays for bodily injury and property damage to others that result from the actions of the insured driver. Can I get liability insurance if I don't have a car? Yes. You can buy a nonowner liability policy. A nonowner policy pays for damages and injuries you cause when driving a borrowed or rented car but not for damage to the auto you are driving. Is my policy good in Mexico? Mexico does not require automobile insurance. However, be advised that in Mexico you can be held criminally responsible as well as financially responsible for any auto accident you cause. In addition, the police may detain you until they determine who is at fault if you are in an accident that results in an injury. You will have to show that you either have insurance recognized by the Mexican government or the financial ability to pay any judgment against you. Mexico does not recognize U.S. auto liability policies. You can buy Mexican liability insurance from Texas agents who specialize in it. Some U.S. companies provide a free endorsement extending your policy's coverage to infrequent trips of up to 10 days and as far as 25 miles into Mexico. You can buy coverage for longer stays, but it is valid only within 25 miles of the border. Phone books in border towns list insurance agents that specialize in car insurance for travel in Mexico. Your regular local agent also might be able to help you find coverage with a Texas-licensed Mexican company. You also can buy a limited Mexico "tourist" endorsement that extends your Texas liability coverage to pay expenses exceeding those covered by a Mexican liability policy. This endorsement covers trips of any distance and any length of time. Ask your agent which endorsements your insurance company offers. Remember that some companies attach endorsements to your policy automatically, while others do so only at your request. Other companies do not cover accidents in Mexico at all. Will my auto policy pay for flood damage? Yes, if you have comprehensive "other than collision" coverage. Does my policy cover equipment such as cellular phones? Your policy won't pay for tapes, compact discs, cellular phones, or citizen band radios or for stereo equipment not permanently installed in your car unless you pay extra for separate coverage. Do I have to buy collision and comprehensive coverage? Texas law does not mandate this, but lenders usually require collision and comprehensive on cars they are financing. When I buy an additional car or a replacement car, is it automatically covered? Yes, but there are certain limitations. An additional car automatically has the same coverage as the car with the broadest coverage provided by your policy. For example, if you have two cars - one with liability coverage only and one with liability, collision, and comprehensive - and you buy a third car, the third car will automatically have liability, collision, and comprehensive. A replacement car, however, automatically has the same coverage as the car it replaced. For example, if you trade in an older car, which has only liability coverage, on a new car, the new car automatically has only liability coverage. Be sure to notify your insurance company as soon as possible that you have added or replaced a car and which coverages you want for the new car. You could lose coverage on the new car if you wait longer than 30 days. What if I drop collision and comprehensive on my financed car? Don't. The lender will buy single-interest automobile physical damage coverage. It's expensive and protects only the lender, who will add the premium to your note. You may drop collision and comprehensive once you have paid off your car loan, but you should keep the coverages as long as you owe money on your car. Lowering Your Car Insurance Costs Return to Index Car insurance premiums can cut deeply into your family budget, but you can lower your costs by shopping smart and driving carefully. This chapter outlines Texas' rating system, offers money-saving tips, and describes how your driving record affects your premium. How are car insurance rates determined? Texas encourages competition to keep car insurance rates in line. Most insurance companies set their own rates, within a range of 30 percent above or below "benchmark rates" determined each year by the Texas Commissioner of Insurance. Two dozen companies called "county mutuals" are an exception. They set their own rates, without limitations. Most county mutuals specialize in high-risk drivers and generally charge more than other companies. Check your policy's Declarations page for the words "county mutual." If you and your covered family members have good driving records, you probably don't belong in a county mutual and should shop for coverage with a standard or preferred company that offers lower rates. What are standard, preferred, and nonstandard companies? A preferred company offers the lowest rates. A standard company's rates are somewhat higher than a preferred company's. A nonstandard company sells at high rates to drivers with poor driving records or other problems. In Texas, a nonstandard company is likely to be a county mutual. Many insurers actually are groups of companies. An insurance group might consist of a preferred company, a standard company and a county mutual. Auto Insurance MAP Sometimes good drivers pay higher rates than they should because they were placed in the Texas Automobile Insurance Plan Association (TAIPA) or a county mutual. TDI's auto insurance Market Assistance Program (MAP) offers these drivers a chance to save money by helping them find coverage with a standard insurance company. To be eligible, you must live in a ZIP code designated by TDI as "underserved" by standard insurance companies. In addition, you and all other drivers covered by your policy may not have any tickets for moving violations or at-fault accidents for the past three years. TDI will verify your driving record and make your application available to participating insurance companies. The companies may offer coverage at their standard or preferred rates to qualifying applicants. What factors affect my individual premium? Your age and, for younger drivers, your marital status. Male drivers under 25 and unmarried women under 21 have the highest rates. Drivers over 50 may get discounts. The county where you keep your car. Because urban counties have more accidents and auto thefts, their rates tend to be higher than those of rural areas. Your car. Collision and comprehensive rates are highest for luxury, high-performance, and sports cars. Rates may also be higher for cars that damage easily or cost more to repair than others. How you use your car. Rates are higher for cars driven to work or used for business. Your deductibles. Deductibles are your share of the cost of a collision or comprehensive claim. You can reduce your premium by raising your deductibles. Surcharges. Dollar penalties are added for accidents resulting in property damage of ,000 or more. Discounts. Some discounts are required by the , while others are optional with companies. Ask your agent. County mutuals, however, are not required to give any discounts. Auto Insurance Discounts Mandatory Defensive driving and driver education courses for young drivers 10 percent off Liability, Collision, Medical Payments, and PIP Airbags and other passive restraints 15 percent off Medical Payments and PIP (driver's side) 30 percent off Medical Payments and PIP (both sides) Drug/alcohol education 5 percent off Liability, Collision, Medical Payments, and PIP Anti-theft devices Reduces Comprehensive premium; amount varies by device and county Two or more cars on a policy 20 percent off Liability, Medical Payments, and PIP 15 percent off Collision Optional Companies may give discounts for your age and annual mileage driven policy renewal, with a good claims and driving record anti-lock brakes a parent or family whose young driver is away at school without a car full-time college and high school students with a "B" or 3.0 average cars with automatic daytime running lights membership or adult leadership in certain youth organizations. How can I check out a company or agent? A low rate is no bargain if you buy from a fraudulent company or agent. Call TDI's Consumer Help Line. We can tell you whether an agent or company is authorized to sell car insurance in Texas. We also can tell you a company's complaint record and, in most cases, its letter grade from a national financial rating service. What can I do as a consumer to find the best deal on car insurance? Decide before shopping what coverages you need. If you are buying collision and comprehensive, decide on the deductibles you want. Choose the highest deductible you can afford (and the lender will accept); it will lower your premium. Because rates vary widely, ask several companies and agents for price quotes. Compare "apples to apples." Make sure the quotes you get are for the same coverages. Ask if the agent is quoting you premiums for the insurer's preferred company. If not, ask why. Answer questions truthfully. Wrong information could get you an incorrect price quote or denial of coverage. for your free copy of the Texas Automobile Insurance Rate Guide for your county. Guides are also available on TDI's website at www.tdi..tx.us Be sure to consider the company's financial strength and complaint index, which appear in the rate guides. How does my driving record affect my premium? A good driving record can save you money. Preferred companies, which charge the lowest rates, accept only applicants with good driving records. A good driving record can get you a discount from some companies when you renew your policy. Ask your agent. Tickets and accidents can mean higher premiums if companies classify you as high risk. You could end up in a county mutual or TAIPA, also known as the assigned risk plan. Accidents or major driving offenses can add surcharges to your premium. Surcharges are mandatory and stay on your premium for three years. These additional premium charges include: Most Drivers* TAIPA Drivers** One accident (at-fault) in 36 months 15% 20% Two accidents 35% 40% Three accidents 60% 60% Each moving violation (speeding, etc.) 0% 15% Involuntary manslaughter 60% 60% Driving under the influence 60% 60% Criminally negligent driving 60% 60% No license, or license suspended 35% 60% * Surcharges for most drivers are percentages of the lowest benchmark rates in your county for liability, collision, PIP, and medical payments coverage. ** TAIPA surcharges are percentages of the drivers' actual premiums. I bought a car after moving to Texas. Do I have to pay higher rates because I did not already have insurance? Companies cannot charge more for liability insurance because of your prior lack of coverage unless you drove uninsured in Texas for more than 30 days during the 12 months before you applied. Insurance on the Installment Plan Return to Index I can't afford to pay my premium all at once. Are installment plans available? Yes. TDI rules require all auto insurers to offer installment plans. Some companies only offer payment plans through premium finance companies, which charge high interest rates. Shopping smart for car insurance means you should seek not only low rates but also low-cost financing. Ask who will provide your installment plan. Look for insurance companies that offer their own installment arrangements. Ask about the down payment, the number of installments, interest or service charges, and the amount of your total monthly payment. Get premium quotes and installment plan information from several companies before you decide. What terms are available if I pay my premium in installments? TDI rules require insurers and premium finance companies to give you terms at least as good as these: For a 12-month policy, a 16.67 percent down payment and 10 equal monthly installments. If the policy is written through TAIPA, the down payment is 20 percent. For a six-month policy, 33.33 percent down, with four equal monthly payments. Insurers and premium finance companies may offer even smaller down payments and more time to pay. An insurance company may add a service charge to your payment. The basic service charge is $3 per month, but the company can add 50 cents for every $250 (or fraction) of premium over $500. What is a premium finance company? Premium finance companies are specialized lenders that loan consumers money to pay their insurance premiums, often at high interest rates. Sometimes the only installment plan offered is through a premium finance company, which might be owned by the agent selling your policy. The insurance agent must tell you if your installment plan is with a premium finance company. The agent also must give you the premium finance company's name. Note -- If you buy insurance through TAIPA, an agent who offers a premium finance company loan must give you a disclosure form comparing it with TAIPA's installment plan. The form will show a side-by-side comparison of the premium finance company's payment plan and the TAIPA installment plan. The form will show fees, interest payments, and the amount you will pay under each plan. If you choose the premium finance company, you must sign this form as proof you made your choice after seeing the comparison. How does a premium finance agreement work? You pay the down payment to the agent, who forwards it to your insurance company. Be sure to get a receipt at the time of payment. The premium finance company pays the balance of your premium directly to the insurance company and then collects the amount financed, plus interest, from you in installments. Your loan agreement assigns your power of attorney to the premium finance company for payment transactions involving your policy. The premium finance company can go to the insurer and cancel your policy if you fall behind in your payments. If your policy is canceled for any reason, the premium refund goes to the premium finance company, which uses it to pay off your note. The premium finance company owes you a refund if any money is left over. The finance company must send your refund to you within 20 days after receiving it from the insurance company. A premium finance company must have a license from TDI. You can verify its license by calling TDI's Consumer Help Line. What precautions should I take when dealing with a premium finance company? Make sure the agent presents your payment plan separately from the sale of insurance so you will understand how your premium is being financed. Determine the charges (interest plus fees) the company will use. Compare these to installment plans offered by insurance companies. Also compare premium finance company charges to bank or credit card interest rates. Never buy or finance a policy until all the documents are completely filled out and you understand the charge for each item. Be sure the agreement correctly identifies the financed policy. The agreement should show the policy or binder number, effective date of the policy, and the premium amount. If there is a premium finance agreement, be sure to sign and date it before leaving the agent's office. Insist on getting a copy of the installment agreement. Federal truth-in-lending laws require the lender to give you a copy. Make your installment payments only by check or money order payable to the company named on your premium finance notice. Do not pay in cash. Keep a record. If you do pay cash, demand a receipt. If you or the insurance company cancels your policy, make sure the premium finance company pays any refunds you have coming. Losing Your Insurance Return to Index A cancellation or nonrenewal notice cutting off your car insurance can be painful and frustrating. This chapter explains your rights. What is the difference between cancellation and nonrenewal? Cancellation means the company terminates your policy before it runs out. Nonrenewal means the company refuses to renew your policy when it expires. Does an insurance company have to say why it canceled or refused to renew my policy? Effective January 1, 2000, upon your request, a company must explain in writing its reasons for declining, canceling, or not renewing your policy. This explanation must include the precise incident, circumstance, or risk factor that violated the company's underwriting guidelines the insurer's sources of information about the incident, circumstances, or risk factor. If your policy was cancelled or not renewed before that date, you may request that the company provide you a written explanation. What rights do I have against unfair cancellation? An insurance company cannot cancel an auto policy that has been in effect for more than 60 days unless: you fail to pay your premium you file a fraudulent claim your driver's license or motor vehicle tags are suspended or revoked. This also applies to other drivers who live with you or customarily use your car. Can my insurance company cancel me during the first 60 days after I buy a new policy? During the first 60 days, the company may cancel for any lawful reason, including a ticket or an accident. If the company canceled you because of an accident, it still has to pay for damages covered by your policy. The company must give you written notice at least 10 days before canceling your policy. Do I get my money back if my policy is canceled? If either you or the company cancels your policy, the company must refund premiums paid in advance that did not buy coverage. This amount is called the "unearned premium." For example, if you paid a six-month premium of $600 and your policy is canceled after one month, the company owes you $500 in unearned premium. What rights do I have against unfair nonrenewal? Your policy must be in effect for 12 months before the company can refuse to renew it. This means a six-month policy must be renewed to give you a full 12 months of coverage. The company must give you 30 days' notice before not renewing your policy. An insurance company cannot refuse to renew your policy because of your age or because a family member reaches driving age. Companies cannot discriminate because of race, color, religion, sex, family status, national origin, or disability. Can a company refuse to renew my policy because of claims that were not my fault? Texas rules forbid nonrenewal because of weather-related claims, including damage from hail, floods, tornadoes, high winds, and hurricanes damage from colliding with animals or birds damage from gravel and other flying and falling objects (The company can raise your deductible, however, if you have three such claims in 36 months.) towing and labor claims (The company can refuse to renew your towing and labor coverage, however, if you have four such claims in 36 months.) other claims or accidents that cannot reasonably be blamed on you, unless you have more than one of these claims in a 12-month period. My company just renewed my policy but moved my policy to another company in the same group. Can it do that? Yes, but only if it gives you 30 days' notice that your original policy will not be renewed and complies with other nonrenewal conditions. If the company fails to give 30 days' notice, TDI can require renewal for another year in your original company. My insurance company refused to renew my policy. Where can I get information to help me shop for a new company? We will send you a free copy of the Texas Automobile Insurance Rate Guide. The rate guide shows sample prices charged by companies in your county. Rate guides also are available at TDI's website www.tdi..tx.us Your Rights Against Unfair Discrimination An insurance company cannot deny, refuse to renew, limit, or charge more for coverage because of your race, color, religion, or national origin. A company also cannot deny, refuse to renew, limit, or charge more for coverage because of your age, gender, marital status, geographic location, disability, or partial disability unless the refusal, limitation, or higher rate is "based on sound underwriting or actuarial principles." This means the company would have to show valid evidence that you present a greater risk for a loss than others it is willing to insure. In addition, a company cannot unfairly discriminate between individuals of the same rate or risk class in its rates, policy terms, benefits, or in any other manner unless the refusal, limitation, or higher rate is "based on sound actuarial principles." If you think you have been a victim of unfair discrimination, see Chapter Eight Getting Help for information on filing a complaint. You may sue insurance companies for unfair discrimination, including denial of insurance, and collect up to $25,000 in civil penalties if you win. The suit must be filed in an Austin district court. However, if the court finds the suit groundless, in bad faith, or brought for the purpose of harassment, you may be ordered to pay the insurance company's legal expenses. Auto Insurance for "High Risk" Drivers Return to Index Being labeled "high risk" makes it harder to get car insurance, particularly at favorable prices. This chapter outlines rights and coverage options for drivers who have trouble finding car insurance. What is a high-risk driver? If you have tickets and accidents on your driving record, many companies will classify you as high risk. Insurance companies often check motor vehicle records for your driving history and credit reports for your financial history before writing or renewing your policy. Owning a car built for speed also can label you as high risk. A company denied me coverage because of a CLUEŽ report. What is CLUEŽ and how can I get a copy of its report? Many companies use the Comprehensive Loss Underwriting Exchange (CLUEŽ) to learn an applicant's insurance claims history. If the company based its decision even partly on a CLUEŽ report, you can get a free copy by calling the Equifax Insurance Consumer Center toll-free at Before calling, get the CLUEŽ reference number from the company's denial letter or from the company. Using the reference number will speed the process and ensure you request the right report. Can a company refuse to cover me because I want only the basic auto liability insurance required by Texas law? No. TDI rules prohibit a company from denying coverage because you want only basic liability coverage. What options do high-risk drivers have? Several major insurer groups include county mutuals for their high-risk business. TAIPA is available for drivers who can't find basic liability coverage elsewhere. TAIPA sometimes is called the assigned risk plan. Keep shopping! Each company has its own underwriting guidelines for deciding whether to insure people. What coverages does TAIPA provide? If you get auto insurance through TAIPA, your policy will provide basic liability insurance required by Texas law (see page 1) $2,500 worth of Personal Injury Protection (PIP) uninsured/underinsured motorist coverage. Can I get more insurance than that from TAIPA? No. TAIPA doesn't provide collision or comprehensive insurance. Nor does it offer more liability coverage than the law requires. TAIPA policyholders who need collision, comprehensive, or more liability coverage should ask an agent for help finding a policy. How does TAIPA work? You qualify for coverage through TAIPA only if two insurance companies reject you. A licensed insurance agent must sign your application and send it to TAIPA. TAIPA then assigns you to a company, which collects your premium and pays your claims. The company will provide coverage for as long as three years. Is TAIPA coverage expensive? TAIPA coverage costs more than most companies charge, but could be less than you would pay a county mutual. TAIPA policyholders must pay additional premiums, called surcharges, for traffic convictions. They also pay higher surcharges for accidents than other drivers. The chart on page 10 compares the surcharges TAIPA drivers pay with those paid by other drivers. TDI rules encourage insurance companies to take policyholders out of TAIPA and insure them at lower rates after a year without tickets or accidents. The rules also require companies to offer cheaper "voluntary" policies to their TAIPA policyholders who have gone three years without tickets or accidents. How do I get insurance from TAIPA? Apply through a licensed agent who will forward your application and first payment to TAIPA. You should receive a proof-of-insurance card by mail within 10 days. Will agents automatically tell me about TAIPA? Not always. An agent who quotes you a premium higher than TAIPA's must tell you about TAIPA if you were previously uninsured and had no more than one accident and one ticket in the past three years. Only agents specifically certified by TAIPA may sell TAIPA policies. How can I get in touch with the TAIPA? If you don't receive your proof-of-insurance card or have questions about your coverage, call Will coverage by TAIPA or a high-risk insurer hurt my record? Texas rules forbid companies to reject you or charge you higher rates because of your previous insurance carriers. After the Accident... What Now? Return to Index Accident Checklist Call the police if somebody is injured or killed, if a vehicle can't be moved, or if the accident involved a hit-and-run driver. Your uninsured motorist coverage pays for a hit-and-run accident only if you report the accident to the police. Move your car, if possible, to avoid blocking traffic and to protect it from further loss or damage. Get the other driver's name, address, telephone number, license plate number, driver's license number, and insurance information. Give the other driver the same information about you. Record the insurance company name and the policy number exactly as shown on the other driver's proof-of-insurance card. Similar company names can cause confusion. If you have the name of the other driver's company, call TDI toll-free at Get witnesses' names, addresses, and telephone numbers. What does my policy require me to do after an accident? Notify your insurance company promptly. Give names and addresses of witnesses and injured persons. Promptly send the company copies of notices or legal papers you receive about the accident. Cooperate with the company's investigation. You might have to submit a proof-of-loss form and undergo a medical examination. When should I notify my insurance company? Notify your insurance company immediately, while details are fresh in your mind. Your company probably has a 1-800 number. If not, call your agent. Some agents have authority to settle small claims. The company will advise you about seeing an adjuster and getting repair estimates. Remember to have your seatbelts and airbags inspected and to ask the insurance company to include necessary repairs to them as part of your claim. If you report a claim by phone, follow up in writing to protect your rights under Texas' prompt-payment-of-claims law. If the other driver caused the accident, what should his or her insurance company pay? The company should pay the amount for which the at-fault driver is legally responsible, up to the policy's limits. The other driver's insurance company should pay: your medical and hospital bills wages lost because of an injury car rental while your automobile is being repaired repair or replacement of your car, up to its actual cash value compensation for pain and suffering if anyone is hurt. What if the other driver's liability insurance isn't enough to pay all my bills? Medical: If the other driver's insurance won't cover all your medical bills, file a claim for the difference against your Personal Injury Protection (PIP) coverage, if you have it. For amounts over that, you can claim against your uninsured/underinsured motorists (UM/UIM) coverage or your health insurance policy. Auto Repair: File a claim against your collision or UM/UIM coverage for the difference (minus your deductible) between the damage to your car and what the other driver's policy will pay. If I have only liability insurance, does my policy pay my medical and car repair bills? No. Your liability insurance pays only for other people's injuries and property damage if you cause an accident. The insurance company is totaling my car. How can I make sure I get what it's worth? An insurer totals a car if repairs would cost more than it is worth. An insurer typically will value your car by the National Automobile Dealers Association Used Car Guide or by a "market survey" showing average prices of various makes and models. The company's offer might not recognize your car's condition, special features, or value on the local market. A company is more likely to raise its offer if you can show that your car would sell for a higher price in your area. Get several used car dealers' written price quotes for a similar automobile. Newspaper used-car ads also can build your case. What is actual cash value, and how does it affect my claim? Insurance pays for repairs or replacement only up to a car's actual cash value - the amount it would have sold for before the accident. The amount offered might be less than you owe on your car loan. In this case, you must be prepared to negotiate to get what you feel is a fair deal if your car is "totaled." The insurance company wants to total my car; I want to fix it. What can I do? You can keep your car if you are willing to subtract its salvage value from the insurance settlement. However, first make sure the cost to repair the car will not exceed the car's actual cash value. To find out the salvage value, contact local salvage yards for estimates. Be sure to record the yard's telephone numbers and the names of the people you spoke with. What if my insurance company totals my car but we cannot agree on the amount to be paid by my collision coverage? You can demand an appraisal of the loss to resolve a dispute over the amount of a claim. Appraisal allows you and the company to hire separate damage appraisers. (See "Auto Damage Appraisers" in the Yellow Pages.) The two appraisers choose a third appraiser to act as an umpire. The appraisers then review your claim, and the umpire rules on any disagreements. The appraisal decision is binding, but only as to the amount of the loss. If there is a dispute over what is covered, you can still pursue a settlement of the coverage issue after the appraisal takes place. You are required to pay for your appraiser and half of the umpire's costs. Appraisal is available only in disputes between you and your insurance company. It is not available if the other driver was at fault and you disagree with his or her company's offer. Can an insurance company tell me where to get my car fixed? No. The insurance company is required to notify you of your freedom-of-choice rights regarding a car repair shop or car parts. On collision and comprehensive claims, however, your company is obligated to pay only for parts of "like kind and quality" to those that were damaged. Do I get a rental car while mine is being fixed? If the other driver was to blame, his or her liability insurance will pay for a rental car. If the accident was hit-and-run or the other driver was uninsured and at fault, your UM/UIM property damage coverage will pay. If your car was stolen and you have comprehensive insurance, your company will provide $20 per day, up to a maximum of $600, for a rental car. If the car is being fixed or replaced for some other reason, your insurance company won't provide a rental car unless you have rental reimbursement coverage. The other driver's insurance company wants me to sign a release. How long can I delay this? Don't sign until you are satisfied with your total settlement. Get a letter from your doctor estimating the cost and length of your future medical treatment. You might want to consult an attorney before accepting a settlement. Under Texas law, you have two years after an accident to either settle your claim or file a lawsuit. Can the other driver's insurance company delay paying for my car repairs to pressure me into signing a release on my injury claim? No. Texas law prohibits this unfair tactic. If it occurs, you have the right to file a formal complaint with TDI. How long can my company take to pay my claim? Texas' prompt-payment-of-claims law sets these deadlines: The company must respond within 15 days after receiving your claim in writing. It probably will ask you to document your loss. After you submit any requested documentation, the company has 15 business days to accept or reject your claim. Once the company agrees to pay your claim, it must send your check or draft within five business days. A company that cannot meet these deadlines must send you a notice explaining why. The company then has 45 days to either approve or reject the claim. Note--This law does not apply if another driver's insurance company is paying for your accident. However, the company is required to act in good faith and to make a prompt and fair settlement. The other driver's insurance company won't pay because the driver denies fault. The police did not investigate the accident, but I have two eyewitnesses. What can I do? It's important to get names, addresses, and telephone numbers of any witnesses to the accident. If the other driver denies fault, make sure insurance company knows about the witnesses. Independent witnesses could make a difference. I'm getting nowhere with the other driver's insurer but I'm afraid to file a claim against my own company because it might raise my rates or refuse to renew my policy when it expires. Any advice? Talk to your agent or your company's claims or underwriting department about how a claim might affect your rates or renewal. A company can raise rates because of certain accidents but not if you were not at fault. A company cannot refuse to renew your policy solely because of one not-at-fault accident in a 12-month period. If the accident affected your Texas Department of Public Safety (DPS) driving record, your company may consider that in determining your rates, whether you made a claim or not. Do I get an explanation if the company refuses to pay my claim? Texas law requires your company to explain in writing why it rejected your claim. Don't take the company's word that your claim isn't covered. Ask to see the policy language that supports denial of your claim. A court usually will order the company to pay if the language is unclear and the policy reasonably could be read your way. What do I do if the other driver refuses to tell me his or her insurance company? If the police investigated, get the accident report. If an officer did not investigate, you can report the driver's refusal to the police. This could result in a report identifying the driver's insurance company. In addition, DPS keeps files of forms - called SR-22s - which show the insurance companies of people convicted of DWI or driving without insurance. You can call DPS at Automobile Insurance for Young Drivers Return to Index This chapter answers some of the most common questions asked by teen-age drivers and their parents. Do I really need to take Driver's Ed? Yes. If you are under 18, you must complete a driver training course approved by DPS to obtain a Texas driver's license. Most insurance companies give a 10 percent driver training credit for teen-agers who complete driver education. Parent-taught drivers are eligible for the discount if the parent used a DPS-approved course. County mutual insurance companies are not required to offer this discount. My parents are going to buy me a car for graduation. Would it be better to put the title in their name or in mine? It depends. If the car title is in your name, you will need to show proof of your own insurance policy. This costs more than having the car on your parents' policy. I'm going to college in another , and my car is registered in Texas. Am I still covered by my (or my parents') Texas policy? Yes. Your company may adjust your premium because rates are based on where your car is usually located. You also should find out about the auto liability insurance requirements of the where you attend college. I'm enlisting in the military after high school. Does my Texas policy still cover me if I'm stationed in another ? Yes. Your Texas policy will automatically meet any other 's liability insurance requirement. At renewal, you may be required to buy insurance in the where you're stationed. My teen-ager just received his driver's license (or learner's permit). Do I have to put him on my policy? Your policy covers children living at home or away at school, even when not named on your policy. Because the company is required to charge the correct rate, based on the classifications of the drivers in your family, you should add your children to your policy. If the company learns about them later - because of an accident claim, for instance - the company will bill you for the extra premium you should have paid. My parents want to add me to their insurance policy, and their company is telling them it won't renew their policy. Can the company do this? No. A company cannot refuse to renew a policy just because of a covered person's age. My daughter is going away to college, and I want to remove her from my policy. Can my company force me to keep her on the policy? Yes. Technically, you could drop her with a "named driver exclusion" endorsement. Few companies will agree to this, however. Besides, it's risky to drop coverage when your teen-ager might occasionally drive at school or when home on visits. Does my teen-ager have to be rated on the most expensive vehicle? Not necessarily. The rules on this are complex and address a variety of situations. Generally, if a teen-ager is the "principal driver" of an automobile, his or her rate will go on that car. If not, the teen-age driver is assigned to the car (usually the most expensive) that produces the highest rate. My 20-year-old son no longer lives with me. The company still wants to have him on my policy. What can I do to take him off the policy? Use documents like his driver's license, lease agreement, or utility receipts to prove that your son has moved. A remotely possible alternative would be a named driver exclusion added by mutual agreement between you and the insurer. Can I purchase a nonowner policy for my teen-ager and exclude him from my policy? This usually is a bad idea. A nonowner policy merely provides additional liability insurance when driving a nonowned vehicle. If your teen-ager has an accident while driving your car, neither your policy nor the nonowner policy will pay for your vehicle's damage. You might also be unprotected financially if held liable for an accident caused by your minor child. Finally, if the nonowner policy is rated properly, your teen-ager's liability insurance might cost as much as or more than it would cost if he was on your policy. Getting Help Return to Index What can I do if a company takes too long to pay my claim or treats me unfairly? Try to solve your problem directly. Texas law requires most companies to have toll-free telephone lines for policyholders. You can complain to TDI. Call TDI at You also can file a complaint electronically on a form available at TDI's website at www.tdi..tx.us What happens after I file a complaint? Consumer Protection will promptly notify the company of your complaint (usually by fax), ask for a detailed response and send you a copy of the response when it is received. The insurance specialist assigned to your case will keep you informed by mail of the status of your complaint and will send you an explanation of the final outcome. Most complaints are completed in about 45 days. TDI might not be able to resolve your complaint, but it can bring about a more thorough review of the matter. In addition, your complaints and inquiries help TDI assist other Texans by identifying insurance companies and agents that should be investigated helping determine the kinds of help consumers need most. For More Information Return to Index
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