The Minimum Amount of Insurance Coverage Required
Insurance requirements vary by state and by type of policy, but every driver and homeowner should know the minimum standards set by law or lenders. In Texas, auto insurance is the most common mandatory coverage, while other types of insurance are often required depending on circumstances.
Minimum Auto Insurance Requirements in Texas
Texas law requires all drivers to carry a minimum amount of liability insurance, also known as 30/60/25 coverage:
- $30,000 for bodily injury per person
- $60,000 for bodily injury per accident
- $25,000 for property damage per accident
This makes certain drivers can pay for damages and injuries they cause in an accident. However, these limits are considered low compared to actual accident costs, which is why many drivers purchase higher limits.
Homeowners Insurance Minimums
Texas does not legally require homeowners' insurance. However, if you have a mortgage, your lender will likely require you to carry enough coverage to protect the property. This usually means a policy that covers the replacement cost of your home and sufficient liability protection. There is no statewide minimum, but lender requirements function as a de facto standard.
Flood Insurance Requirements
Flood insurance isn't a part of standard homeowners insurance. If you live in a high-risk flood zone and your property is financed through a federally backed mortgage, you're required to carry flood insurance through the NFIP or National Flood Insurance Program or a private insurer. The minimum is usually based on your loan amount or the replacement value of the property.
Business and Workers’ Compensation Coverage
Texas does not require most private employers to carry workers’ compensation insurance, making it unique compared to other states. However, certain industries, contractors, and government jobs may require proof of coverage. Businesses that own vehicles must also carry commercial auto insurance that meets or exceeds state liability minimums.
Why Minimums May Not Be Enough
State rules define the minimum amount of coverage you need, yet merely having that amount can put you at risk financially. These amounts are often not enough to cover medical bills, lawsuits, and damage to property. People who have insurance are encouraged to buy more coverage to be safer.
Conclusion
The least amount of insurance you need depends on your scenario. For instance, drivers must fulfill the state's vehicle insurance mandates, homeowners must follow their lender's rules, and flood insurance may be required in locations with a high risk of flooding. Knowing these rules will help you stay safe and in compliance.
