Insurance Resource Page for Texas Teens and Young Adults
Insurance provides financial protection from accidents and other unexpected events. Different kinds of policies insure against different "risks," which might include a traffic accident that damages your car, an apartment fire that destroys your personal property, or an illness or injury that requires expensive medical treatment.
In general, the insurance needs of people under age 25 are more limited than people who are older. For instance, you may already have some types of coverage through a parent's or guardian´s policy. However, one type of policy you are almost certain to need is auto insurance.
This page provides information about auto insurance, renters insurance, and health care coverage for younger Texans. In addition, the following Texas Department of Insurance (TDI) resources can help you understand key topics and issues relating to insurance coverage:
- How Insurance Works explains the basic terms and key concepts that are common to all types of insurance
- Frequently Asked Questions answers a number of questions that teens and young adults generally have regarding insurance
- Glossary of Insurance Terms provides definitions for common insurance terms
- Shopping Smart provides information to help you shop for the insurance you need
- Helping You With Your Insurance Complaint explains what you need to do if you have a problem with your insurance company and what TDI can do to help.
- TDI Working For You provides an overview of TDI and helpful contact information.
Texas law requires all drivers to have auto liability coverage to pay for any property damage and injury to others that results from any accidents they cause. A first offense for driving without insurance can result in a court fine of between $175 and $350. Subsequent offenses can result in court fines up to $1,000, license suspension, and impoundment of your vehicle. In addition, if you are convicted of driving without insurance, you will have to pay an annual surcharge of $250 to the Texas Department of Public Safety (DPS) in order to maintain your Texas drivers license. The surcharge remains in effect for three years, meaning a first offense could ultimately cost you more than $1,000.
Your insurance company will provide you with a card or certificate as "proof of insurance" at the beginning of each policy term. You will be required to show proof of insurance when you
- Are asked for it by a police officer or other law enforcement official.
- Have an accident.
- Register the title to your car or renew its registration.
- Obtain or renew your driver´s license.
- Have your vehicle inspected during an annual required state safety inspection.
Texas law requires you to have basic minimum liability coverage of $30,000 per injured person, up to a total of $60,000 for everyone hurt in an accident, and $25,000 for property damage. This coverage is typically called "30/60/25" coverage. Keep in mind that basic coverage might not be enough if you are held liable for an accident. For instance, if you cause an accident that results in $35,000 in damage to the other driver´s vehicle, and you have only the basic $30,000 property damage limit, you could be personally responsible for paying the additional $5,000 yourself. For this reason, many drivers increase their coverage limits. Ask your agent about higher liability limits, but remember that the higher your limits, the more your premium, which is the amount you pay for the insurance, will be.
It´s also important to understand that basic liability coverage pays only for the damages and injuries you cause to other people. It won´t pay to repair or replace your car. To have coverage for your vehicle in an accident regardless of who´s at fault, you will need to add "collision" coverage to your policy. You can buy "comprehensive" coverage to pay to repair or replace your car if it´s stolen or damaged by hail, fire, road debris, vandalism, or other similar covered risks. You might also wish to add "Personal Injury Protection," commonly called PIP. PIP will pay for your and your passenger's medical and medically related expenses and will replace some lost wages if you´re unable to work because of an accident. "Uninsured/Underinsured Motorist" (UM/UIM) coverage pays your expenses from an accident caused by an uninsured motorist or if the other driver did not have enough insurance to cover your bills, up to your policy´s dollar limits. UM/UIM also pays for accidents caused by a hit-and-run driver if you reported the accident promptly to the police.
The following TDI resources can help you better understand and shop for auto insurance:
- Auto Insurance FAQ for young Texas drivers.
- Automobile Insurance Made Easy is TDI´s consumer publication that covers a wide range of auto-insurance-related topics.
- Automobile Insurance Price Comparisons provides price quotes and contact information from most Texas insurers, including quotes for drivers under 25.
If you live in a rented home or apartment, you may need to buy renter´s insurance to cover your personal property in the event of fire, theft, or other covered loss. Your landlord´s insurance won´t pay to repair or replace your property.
Typically, renters insurance costs $30 or less per month, although you should expect to pay more if you have a lot of expensive items. An "actual cash value" renters policy will pay for a property loss in the amount of the resale value of the item at the time the loss occurred. In other words, if your two-year-old computer is damaged by water from a broken pipe, the policy will only reimburse you for the value of a two-year-old computer -- not a new one. However a "replacement value policy" will reimburse you for the amount needed to purchase a new item of like kind and quality to the one that you need to replace. Replacement value policies cost more than actual cash value policies because they pay more for the losses you incur.
Renters insurance essentially covers everything a homeowners policy does, except for the value of the rented structure. Many renters policies will pay for the cost of a place for you to stay temporarily if the damage to your property makes your home uninhabitable. A renters policy also protects you from legal liability in the event that someone has an accident and is injured on your property. In addition, many renters policies even cover property losses that occur off the rented premises, up to a certain limit, such as lost luggage or a stolen camera on vacation.
If you´re away at school, your personal property may be covered by your parent's or guardian´s homeowners policy and you don´t need a separate renters policy. Make sure your parents review their policy carefully to determine whether your property is covered while you´re living away from home and what the limit of the coverage is. It´s a good idea for them to check with their insurance agent to verify the coverage.
The following TDI resources offer more in-depth information relating to renters insurance:
- Renters Insurance provides general information on renters insurance.
Health care coverage pays for the cost of medical services as a result of illness or injury. Younger people often forgo health insurance because they´re in good health and expect to be so for a long time. However, although it is true that younger individuals are less likely to have a serious illness, it can occur. Moreover, a serious physical injury as a result of an accident can happen to anybody at any time.
If your parents have health care coverage and you still depend on them for financial support, more than likely you will also be covered under their policy. Dependent children may remain enrolled in a parent´s health plan up to age 25. If your parents are without health coverage, you should consider obtaining a policy of your own. Because younger people can generally be expected to remain in good health, health coverage generally costs significantly less for them than for people who are older. If you´re a college student, find out whether your institution offers a student health plan. The majority of larger colleges and universities offer some type of affordable health coverage.
In some cases, colleges may require you to have health care coverage as a condition of enrollment.
Health care coverage can be an extremely complex topic. In general, however, if you´re purchasing an individual policy directly from an insurer, shop around with multiple companies for the best available coverage at the best price. Always read a policy before purchase, and carefully consider whether it meets your health care needs.
The following TDI resources can help you better understand how health coverage works and help you find a policy that's right for you:
- Your Health Care Coverage explains the many aspects of health care coverage in detail, including the differences between managed care and indemnity coverage and group and individual health plans.
- Health Maintenance Organizations provides detailed information about Health Maintenance Organizations (HMOs), which utilize special networks of hospitals, physicians, and service providers.