Insurance Laws in Texas
Texas has a unique insurance market, and state laws are designed to regulate insurers while protecting policyholders. These laws set the rules for how companies must operate, the coverage they must provide, and the rights consumers have when filing claims.
Regulation of Insurance in Texas
The Texas Department of Insurance (TDI) oversees all insurance activity in the state. TDI ensures that companies follow fair practices, maintain financial stability, and provide consumers with reliable policies. It also investigates complaints and enforces penalties when insurers violate the law.
Mandatory Auto Insurance
One of the most well-known insurance requirements in Texas is auto liability coverage. Drivers must carry minimum liability insurance of:
- $30,000 for bodily injury per person
- $60,000 per accident
- $25,000 for property damage
This coverage ensures that drivers can pay for damages or injuries they cause in an accident.
Homeowners Insurance Laws
While Texas does not legally require homeowners to carry insurance, most mortgage lenders will require it. Homeowners insurance policies in Texas must comply with TDI rules regarding disclosures, coverage clarity, and fair claim handling. Insurers must also follow strict timelines when processing claims, such as acknowledging them within 15 days.
Flood Insurance Exception
Standard homeowners' insurance in Texas does not cover flooding. Property owners must purchase separate flood insurance, either through the National Flood Insurance Program (NFIP) or private insurers. This is especially important in Texas, where flooding is a frequent risk.
Workers’ Compensation Insurance
Texas is unique because it does not require most private employers to carry workers’ compensation insurance. However, companies that opt out (called “non-subscribers”) may face lawsuits from employees if workplace injuries occur.
Consumer Protection and Bad Faith Laws
Texas law protects policyholders against unfair practices through the Unfair Claims Settlement Practices Act. Insurers cannot delay, deny, or underpay claims without valid reasons. If they act in bad faith, policyholders can file complaints with TDI or pursue legal action.
Conclusion
Texas insurance laws balance consumer protection with company regulation. From mandatory auto insurance to protections against unfair claim practices, these laws ensure that policyholders receive fair treatment. Understanding your rights under Texas law can help you make informed insurance decisions and protect your financial future.
