The Texas Motor Vehicle Safety Responsibility Act states that ”a person may not operate a motor vehicle in this state unless financial responsibility is established for that vehicle.” Financial responsibility is “the ability to respond in damages for liability for an accident that arises out of the ownership, maintenance, or use of a motor vehicle.” Most Texas drivers establish financial responsibility by purchasing an automobile liability insurance policy. When you are at fault in an automobile accident, your liability insurance policy covers the medical expenses of people you injure and damages you cause to other people’s property. Liability insurance does not cover your own medical expenses or damages to your own property.
As of April 1, 2008, the minimum liability insurance coverage amounts Texas drivers must maintain are $25,000 per person, $50,000 per accident, and $25,000 for property damage. On January 1, 2011, the minimum liability insurance coverage amounts for Texas drivers will increase to $30,000 per person, $50,000 per accident, and $25,000 for property damage. These are the minimum coverage amounts required by Texas law, but because medical expenses and property damages can easily surpass these amounts, many drivers obtain automobile insurance policies with higher liability coverage limits.
Texas drivers who wish not to purchase automobile liability insurance have a few other options to establish the legally required financial responsibility. A person may file a surety bond with the Department of Public Safety. The surety bond pledges real property owned in Texas to be liquidated if necessary to meet the same minimum liability coverages required under the liability insurance option. A person may deposit $55,000 in cash or securities with the state comptroller or deposit $55,000 in cash or cashier’s check with the county judge, either of which would go towards covering any expenses that arise from the person’s automobile liability. If a person owns more than 25 automobiles, most likely a dealer, the person may apply to self-insure. The Department of Public Safety may issue a certificate of self-insurance if the owner of more than 25 automobiles proves to be capable of paying at least the minimum liability coverage amounts should such liability arise.
You have a few options to legally establish financial responsibility for automobile accidents in which you are at fault, but insurance is probably the safest way to protect against that liability. You probably want to have adequate liability coverage to protect your assets because any liabilities that exceed your insurance coverages will be your responsibility to pay out of pocket. Potential medical expenses and property damages can total much more than the minimum liability coverage requirements, so selecting higher liability coverages are a good way to protect against the risk of incurring these costs.
Sources: Texas Motor Vehicle Safety Responsibility Act, Texas Department of Insurance
