How Does Auto Insurance Work in a Car Accident?

Texas law requires that if you cause an accident, you are responsible for paying the costs associated with the accident.

Most insurers in Texas offer a standardized policy called the Texas Personal Automobile Policy, which includes eight types of coverage. Below is an overview of each coverage type, what it pays, and who it covers:

Coverage Type	Description	What it pays	Who it covers
Liability Coverage	Covers people in the other vehicle when you or someone on your policy causes an accident.	Medical and funeral costs Lost wages, and compensation for pain and suffering Car repair or replacement costs Car rental while the other driver’s car is being repaired Punitive damages awarded by a court Your attorney fees if you are sued Up to $250 for bail if you are arrested after an accident	You and your family members – anyone living in your home related to you by blood, marriage, or adoption. Other people driving your car with your permission Family members attending school away from home Spouses living elsewhere during a marital separation may be covered.
Collision Coverage	Covers damage to your car	The cost of repairing or replacing your car after an accident (up to the amount of your car’s actual cash value, minus your deductible). Actual cash value is the market value of a car like yours without damages.	You, your family members, passengers in your car, and others driving your car with your permission.
Comprehensive Coverage	Covers damage to your car	The cost of replacing or repairing your car if it is stolen or damaged by fire, vandalism, hail, falling objects, or an event other than a collision. Comprehensive coverage also pays for a rental car or other temporary transportation if your car is stolen. Your policy won’t pay for an auto theft unless you report it to police.	You, your family members, passengers in your car, and others driving your car with your permission.
Medical Payments Coverage	Covers medical costs associated with the accident	Your medical and funeral bills resulting from accidents, including an accident involving a pedestrian or bicyclist.	You, your family members, and passengers in your car, regardless of who caused the accident.
Personal Injury Protection		Same as medical payments coverage, plus 80 percent of lost income and the cost of hiring a caregiver for an injured person.	You, your family members, and passengers in your car, regardless of who caused the accident.
Uninsured/Underinsured Motorist	Optional – must specifically opt out of coverage	Your expenses from an accident caused by an uninsured motorist, a motorist who did not have enough insurance, or a hit-and-run driver. Also pays for personal property that was damaged in your car.	You, your family members, passengers in your car, and others driving your car with your permission.
Towing and Labor Coverage	Optional Coverage	Towing charges when your car can’t be driven. Also pays labor charges, such as changing a flat tire or jump-starting your battery.	You, your family members, passengers in your car, and others driving your car with your permission.
Rental Reimbursement	Covers charges for a rental vehicle until yours is repaired	A set daily amount for a rental car if your car is stolen or is being repaired. Your company only pays for repairs that were caused by an event – such as fire or theft – that your policy covers.	Named insured (you)

 

There are additional coverages available and those can be discussed with your insurance agent. It is important to know your policy limits, what is covered, and the amount of out-of-pocket responsibility you have as it relates to any accidents you cause.