Texas Requires Proof of Financial Responsibility!
If you drive in Texas, you must show you can pay for accidents you cause. Most Texas drivers do this by buying auto liability insurance.

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BODILY INJURY LIABILITY
Coverage provided to persons (other than the policyholder) who are injured in an automobile accident that the insured individual is found to be at fault for and is held legally liable. Damages are paid for injuries sustained to the person as a result of the automobile accident.

This coverage also pays for legal defense costs in the event the policyholder is sued as a result of the automobile accident. The most common way to write this coverage is termed as *split limits*. As an example, the Bodily Injury limit on the policy will read $25,000./$50,000. The first portion of this limit ($25,000) is the amount of coverage that applies to each PERSON injured in the automobile accident. The second portion of this limit ($50,000) is the amount of coverage that applies to each ACCIDENT.

Therefore, with this example, your insurance will pay $25,000 to each person injured in the automobile accident but no more than a total $50,000 will be paid out for the accident with regard to medical injuries sustained in the accident.

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PROPERTY DAMAGE LIABILITY
Coverage provided for property that is damaged by the insured person in an automobile accident that the insured is found to be at fault for and is held legally liable. Some items that are considered "property" are vehicles, buildings and fences. The most common way to write this coverage is termed as *split limits*.

As an example, the Property Damage limit on the policy will read $25,000. This is the total amount of coverage available for all property that is damaged in the automobile accident. To further illustrate this example, if you are involved in an accident and the other party's vehicle is a 1997 Toyota Camry, the most the insurance company will pay is $25,000 regardless of the cost to repair the vehicle.

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UNINSURED MOTORIST BODILY INJURY COVERAGE
Coverage provided in the event the insured person is involved in an automobile accident, and is not at fault or legally liable for the accident. If the party responsible for the accident does not have an insurance policy to pay for damages, this coverage would pay for injuries sustained as a result of the automobile accident.

UNDERINSURED MOTORIST BODILY INJURY COVERAGE
Coverage provided in the event the insured person is involved in an automobile accident, and is not at fault or legally liable for the accident. If the party responsible for the accident does not have an insurance policy that provides enough coverage to pay for damages, this coverage would pay for injuries sustained as a result of the automobile accident.

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MEDICAL PAYMENTS
Coverage provided for medical and/or funeral expenses resulting from injuries received in an automobile accident. Only those expenses incurred within three years of the date of the accident will be covered. This coverage is provided regardless of who is at fault in the accident but is only available to the policyholder and any other person injured while in the vehicle involved in the accident.

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PERSONAL INJURY PROTECTION
Coverage provided for medical and/or funeral expenses resulting from injuries received in an automobile accident. Only those expenses incurred within three years from the date of the accident will be covered. This coverage is provided regardless of who is at fault in the accident but is only available to the policyholder and any other person injured while in the vehicle involved in the accident.

This coverage provides additional benefits that are not found in the Medical Payments coverage:

• Loss of income from employment (80% limit, must be employed at the time of the accident and be an income producer)
• Expenses incurred for obtaining services that would normally have been performed without pay during the period of disability for the care and maintenance of the family or household, such as maid or cleaning service.

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COLLISION COVERAGE
Collision Coverage pays for damage to your car without regard to who caused an accident. The company must pay for the repair or up to the actual cash value of your vehicle, minus your deductible.

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COMPRHENSIVE COVERAGE
Comprehensive Coverage (Physical Damage Other than Collision) pays for damage to or loss of your automobile from causes other than accidents, such as hail, vandalism, flood, fire, and theft.

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COVERED UNDER TOWING OR RENTAL REIMBURSEMENT
Towing & Labor Coverage reimburses you for towing charges when your car must be towed to a repair shop or other destination. Rental Reimbursement Coverage pays a set daily amount for a rental car if your car is being repaired because of damage covered by your auto policy.

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SHOPPING FOR AUTO INSURANCE
When shopping for an auto policy, remember:

• Insurance companies check your driving record. Drivers with no "at fault" accidents or major traffic convictions usually get the best rates.
• The type of car you drive affects your rates. Rates may be higher for luxury, sport, and high-performance cars. Some companies will not insure cars built for speed.
• If you are an older driver or have a young driver on your policy, it may be harder to get a new policy from some companies.

If you have a clean driving record, avoid using agents who advertise for high-risk business such as drivers with traffic convictions. The rates you will get through these agents will likely be higher.

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MAKE SURE YOUR COVERAGE FITS YOUR NEEDS
Don´t buy more coverage than you need. Compare the cost of your annual premium against your car´s Blue Book value, minus your deductible. If you´re paying more in premiums than it would cost to replace your car, consider dropping collision and comprehensive coverage.

If you still owe money on your car, however, your lender will require you to maintain full coverage. You may be able to drop some coverages and lower your premium. You may not need personal injury protection (PIP) or medical payments coverage if you have health and disability insurance. Remember, though, that PIP and medical payments also cover other people if they are injured while in your car. If you belong to an automobile club, you may already have towing and labor coverage and don´t need it in your policy.

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LOWERING YOUR PREMIUM BY INCREASING YOUR DEDUCTIBLES
You can also lower your auto premiums by raising your deductible. Be aware, however, that if you raise your deductible, you'll have to pay more out of pocket before your policy pays.

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AUTOMOBILE INSURANCE FOR YOUNG DRIVERS
Young drivers must comply with the state´s financial responsibility laws, just as older drivers do. Most young drivers, however, have the option of satisfying their legal requirements by being added to their parents´ auto policy. Adding a young driver to a parents´ policy can be expensive, but it´s cheaper than taking out a separate auto policy.

A parents´ policy covers children living at home or away at school, even when not named on the policy. Even though children are automatically covered on their parents´ policy, it´s important that they be listed on the policy as soon as they reach driving age. Insurance companies are required to charge the correct rate, based on the classifications of the drivers in your family. If you don´t have all of the drivers in your family listed on your policy and 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.
If you have children attending school away from home, tell your insurance company. Because rates are based on where a car is usually located, the insurance company may need to adjust your premium. If the school is in another state, it´s a good idea to check on the financial responsibility laws in that state to make sure you have the appropriate coverages.

When you add your children to your policy, they may be rated on the most expensive auto in your household. The rules for this are complex and address a variety of situations, however. Generally, if a teenager is the "principal driver" of a particular automobile, his or her rate will be based on that car. If not, the teen-age driver is assigned to the car (usually the most expensive) that produces the highest rate.

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REMOVING YOUR CHILDREN FROM YOUR POLICY

You may want to remove your children from your policy when they are no longer living with you. You'll probably have to prove to the insurance company that a young driver no longer lives at home, however. You can use documents like a driver´s license, lease agreement, or utility receipts to prove that your child has moved. A remotely possible alternative would be a named driver exclusion added by mutual agreement between you and the insurer. It´s probably not a good idea to remove your children from your policy who have moved because they are attending school away from home. An insurance company may require you to keep them on your policy, even if you would like to have them removed.

Technically, you could remove your child from your policy with a "named driver exclusion" endorsement. Few companies will agree to this, however. Besides, it´s risky to drop coverage when your teenager might occasionally drive at school or when home on visits.

You can sometimes remove a teen-aged driver from your policy by purchasing a non-owner policy. This usually is a bad idea. A non-owner policy merely provides additional liability insurance when driving a non-owned vehicle. If your teenager has an accident while driving your car, neither your policy nor the non-owner 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 non-owner policy is rated properly, your teenager´s liability insurance might cost as much as or more than if he or she was on your policy.

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SAVING MONEY ON INSURANCE FOR YOUNG DRIVERS

Unfortunately, insuring young drivers is usually expensive. Some young drivers may qualify for discounts, however. If you are under 18, you must complete a driver training course approved by DPS to obtain a Texas driver´s license. Many insurance companies give a 10 percent driver training credit for teenagers who complete driver education. Parent-taught drivers are eligible for the discount if the parent used a DPS-approved course. Some companies offer discounts to young drivers who make good grades in school or who belong to certain youth groups. Ask your agent about any discounts for young drivers.

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