Texas Auto Insurance Key Terms

Use Texas auto insurance key terms to understand the industry and reduce insurance expenses

Most states have a different set of auto insurance rules and regulations and this is the case with Texas auto insurance. To understand the industry within the state, it's important to define the terms insurance companies use. For instance, there is Texas Financial Responsibility Law, which sets minimum coverage standards within the state. Therefore, if your company operates vehicles within the state, knowledge of Texas auto insurance key terms can help reduce expenses and increase industry transparency.

Underwriter

The job of an underwriter is to determine the price of an insurance policy and deductible levels based on the risk level of a client. If the underwriter values the policy premiums too high, a customer may do business with a competitor that offers a cheaper alternative. Pricing too low will cut profits for the insurer. By law in Texas, underwriters earn 15% of premiums.

Texas Financial Responsibility Law

The Texas Financial Responsibility Law states that any driver in Texas must carry at least $25,000 per person in liability coverage, $50,000 in bodily injury coverage, and $25,000 in property damage coverage for each accident.

Texas benchmark rating system

The Texas benchmark rating system is the pricing structure the state of Texas uses to establish a range of cost for insurance policies.

Texas car Guaranteed Auto Protection coverage

Texas car Guaranteed Auto Protection (GAP) coverage protects the policyholder in case more money than the assessed value of the car is owed. This insurance protects the policyholder from the devaluation of the car after driving it off the lot. Typically, the value of the car drops 20% and a typical insurance plan may not cover the entire amount.

Texas Financial Responsibility Verification Program

The Texas Financial Responsibility Verification Program allows law enforcement to immediately verify if a car has insurance coverage.

Surplus lines insurance

Surplus lines insurance is insurance that is unregulated by the state. If a customer cannot obtain insurance from a licensed company, they can get a policy from a company on the surplus lines insurers list.

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