Understanding Texas Auto Liability Insurance Limits

On April 1, 2008, the Texas minimum required insurance was increased for the first time in years from $20,000/$40,000/$15,000 to $25,000/$50,000/$25,0000. What this means is that after April 1, 2008, the minimum Texas auto liability insurance policy provides $25,000 in liability insurance per person, $50,000 in total liability coverage per occurrence, and $25,000 in property damage coverage. Many people are led to believe during the insurance sales process that by buying insurance they are “covered” without limitation for any damages which they might cause in an automobile accident. This is an incorrect understanding of the Texas minimum limits insurance policy. A minimum policy provides only $25,000 in coverage per injured person. This per person limit applies regardless of whether the injured person sustains $25,000 in damages or $25,000,000 in damages. The $50,000 “per occurrence” limit sets a maximum that the policy will pay for personal injury damages for any single event, occurrence, or interrelated sequence of events. If two people are severely injured as a result of the negligence of the insured driver then the policy will pay a total of $50,000 in damages. If two hundred people are injured the policy will still only pay a total of $50,000 for that occurrence.

The third number in the sequence is the property damage limitation. If you run a red light and destroy a $25,000 automobile then the policy will pay $25,000. If you run a red light and destroy a $300,000 Rolls Royce then the policy will pay a maximum of $25,000. If you run off the road while texting and clip the hose at a gas station next to a Mercedes dealership and cause an explosion which burns up 400 vehicles worth $30,000,000 then your insurance will pay a total of $25,000 in property damage.

Understanding insurance coverage limitations gets a little more complicated in wrongful death cases. The minimum insurance policy will pay a maximum of $25,000 for each person killed up to a maximum of $50,000 per occurrence. The per person limitation of $25,000 includes not only the claims of the deceased person but also all derivative claims. Derivative claims are those claims which accrue to people who are not actually involved in the accident. Wrongful death claims are derivative claims. Under Texas law parents, spouses, and children of the deceased person have a right to make a wrongful death claim. All of these claims are subject to the per person insurance limits. For example, if a young father is killed in a truck accident and is survived by his parents, wife, and children, then all of these claims together in addition to the estate’s claim is limited to a single $25,000 limit of liability.

An exception to the rules regarding derivative claims occurs when a wrongful death claimant also has a bystander recovery claim. A bystander recovery claim constitutes an independent, free standing claim under Texas law and gives rise to an additional per person limit.

The minimum required limits are schedule to increase on January 1, 2011 to $30,000/$60,000/$25,000.

For more information contact a Tyler Car Wreck Lawyer today.