Insurance in Texas: A Guide to Auto & Home Coverage
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Most people understand there are benefits to various insurance policies. Unfortunately, costs and a lack of information about which policies are essential or just nice to have can leave many Texans underinsured and at financial risk. While mandates for insurance in Texas exist for only a few types of coverage options, Texans limit their level of financial protection by focusing on only legal requirements.
Types of Insurance Coverage Available in Texas
Texas insurance policies can offer monetary protection against property damages, losses, physical injuries, medical emergencies, and death — accidental death coverage in auto policies and liability for wrongful death in home insurance policies. While there are many types of insurance in Texas, two are essential for protecting major assets.
Auto Insurance in Texas
Every vehicle owner in Texas must have auto insurance. The state has mandatory minimum coverage requirements that all car insurance companies in Texas must provide and comply with.
You can opt for additional coverage (and likely should), like higher liability protection or collision coverage. It’s important to note that liability protection does not protect you or your property. For that, you’ll need personal injury protection coverage. Consider comprehensive coverage to protect your property from other causes of damage like theft, fire, or vandalism.
However, the more you add to your policy, the higher your insurance premium will be. Only choose the options that make the most sense for your financial situation.
Home Insurance in Texas
Unlike Texas auto insurance, homeowners insurance is not a legal requirement. Still, most mortgage lenders require comprehensive coverage to protect their interests. While an insurance company can walk you through specific coverages, a typical comprehensive plan provides:
- Dwelling coverage: This coverage helps policyholders pay for repairs or rebuild a home after a covered catastrophe, such as a fire or storm. It likely won’t pay to repair damages from earthquakes, floods, or routine wear and tear.
- Personal property coverage: Homeowners insurance can include coverage for the loss of furniture, clothes, sports equipment, and more. Many policies offer 50 percent to 70 percent of the amount for the home structure.
- Personal liability coverage: Sometimes accidents happen, and people get injured on your property. Personal liability coverage protects your finances against accidents for which you are found liable or responsible.
- Medical payments coverage: Unlike personal liability coverage, medical payments coverage covers minor medical expenses regardless of who’s at fault. This coverage can also reimburse for funeral costs derived from injury.
Discussing insurance policy requirements with your mortgage lender to avoid violations or foreclosure risks is vital. If you don't maintain adequate insurance, a mortgage lender can purchase a lender-placed policy, which is often more expensive than other plans.
Average Cost of Insurance in Texas
The average cost of insurance in Texas depends on the type and any additional coverage options. Car insurance can run you between $50 and $200 or more per month, depending on factors like credit, age, and location. Home insurance can cost between $2,000 and $6,000 per year, depending on coverages and deductibles.
You can reduce average costs by looking for affordable home insurance or cheap car insurance in Texas. A licensed insurance agent can also help identify the best coverage option for your needs and secure a personalized insurance quote.
Factors Affecting Insurance Rates in Texas
Each type of insurance in TX has unique factors that can affect policy rates. For example, rates for car insurance in Texas rely heavily on the vehicle's make, model, and age. Home insurance rates, alternatively, stem from a heavier focus on location and crime rates.
Regardless of the policy type, a typical insurance rate is likely reliant on the area and weather. In Texas, hurricanes, tornadoes, flooding, and wildfires can all affect insurance premiums because these events increase the rate of claims.
Beyond natural events, rising repair costs and inflation affect payouts, meaning insurers must increase rates to cover potential claims. While it is best to protect your assets with additional coverages, such as flood insurance, many policyholders look for ways to reduce premiums. Thankfully, there are ways to increase protections and reduce insurance costs.
The easiest way to reduce costs is to bundle policies and increase your deductible. You can also shop around and compare policy options.
Useful Texas Insurance Resources
Insurance in Texas is a primarily personal choice. The state only requires auto coverage for individuals, meaning most other insurance options depend on your needs and wants. The cost of insurance depends on the coverage type and any specific policy changes or customizations. A comparison tool is often the best resource to assess various insurance policies and prices. Check out EverQuote to compare quotes and find suitable insurance options.