Is Texas a No-Fault State for Car Accidents? What Businesses Need to Know
When operating company vehicles, understanding Texas auto liability laws is essential. Texas is not a no-fault state. Instead, it follows a fault-based (tort) system, which directly impacts how commercial auto claims are handled after a crash.
Texas Is a Fault State — What That Means for Commercial Drivers
Because Texas is a fault state, the driver who causes the accident is responsible for paying for damages. This includes:
- Vehicle repairs
- Medical expenses
- Lost wages
- Pain and suffering claims
For businesses, this means that if your employee is found at fault while driving a company vehicle, your commercial auto insurance becomes financially responsible.
Minimum Commercial Auto Requirements in Texas
All business-owned vehicles must carry at least the state minimum liability coverage:
- $30,000 per injured person
- $60,000 per accident
- $25,000 property damage
However, most commercial autos need higher limits because business-related accidents tend to result in larger claims. Many businesses choose $1 million+ in liability coverage to protect their assets.
How Fault Affects Commercial Auto Claims
Because Texas is not no-fault, insurance companies must determine who caused the crash before paying out. This can impact a business in several ways:
If Your Employee Is At Fault
Your commercial auto policy pays for:
- Damage to the other driver’s vehicle
- Their medical bills
- Legal defense costs
Your company may face increased premiums after a claim.
If Another Driver Is At Fault
Your business can file a claim with the at-fault driver’s insurer for:
- Vehicle repairs
- Loss of business use
- Employee medical bills
However, because fault states often experience disputes, your own policy’s collision coverage or medical payments coverage may help bridge the gap while liability is sorted out.
Why Businesses Need More Than Minimum Coverage
Commercial vehicles face higher risks due to:
- Frequent driving
- Heavier loads
- Exposure to multiple drivers
- Business liability lawsuits
Supplemental coverages like collision, comprehensive, uninsured motorist, hired & non-owned auto, and umbrella insurance help protect the business from major financial losses in a fault-based state.
