Question: What happens when a car accident claim exceeds insurance policy limits in the state of Texas or according to Texas state law?
No car insurance policy is unlimited. Every automobile insurance policy will cover a claim up to a certain limit. For instance, an automobile liability insurance policy in Texas is required to have a minimum amount of coverage. “Liability” coverage is insurance a driver has in case they cause an accident and injure someone or damage their vehicle. Everyone is required to carry at least the minimum required. Currently (as of 2020), the minimum required liability coverage in Texas is $30,000 for bodily injury per person, $60,000 bodily injury per accident, and $25,000 for property damages. This means the liability policy will cover a claimant’s injury claim up to $30,000 for any one person’s claim, such as medical bills, lost wages, pain and suffering, mental anguish, physical impairment, and more. If more than one person is injured, then the policy will cover no more than $60,000 for all the injury claims combined, but no more than $30,000 for any one person’s claim.
The insurance policy will also cover no more than $25,000 for damages to any claimant’s vehicle, such as repair or replacement value of their vehicle.
If the value of your insurance claim potentially exceeds the amount of liability coverage available under the other (driver's) insurance, you have the option of filing a insurance claim under your own policy for uninsured motorist or "under-insured motorist" coverage (also known as UM/UIM coverage). This is coverage you can buy in the event you are involved in a car accident with a driver who either has no insurance at all, or does not have enough insurance coverage to fully compensate you for your personal injury claim (under-insured motorist). It is always advisable to purchase UM/UIM coverage especially since most drivers are either uninsured or carry only the minimum amount of coverage required under Texas law.