Property and Casualty Insurance · Texas statutes and rules pertinent to property and casualty insurance · 10 min read
Texas auto insurance: PIP, UM/UIM, financial responsibility and TAIPA
- Identify the statutory requirements for establishing financial responsibility and issuing a standard Texas Liability Insurance Card.
- Explain the coverage mandates, benefit structures, deductible rules, and subrogation limits for Personal Injury Protection (PIP) and Uninsured/Underinsured Motorist (UM/UIM) coverage under the Texas Insurance Code.
- Apply Texas statutory standards governing the cancellation, nonrenewal, material change notice, and reinstatement of personal automobile insurance policies.
Financial Responsibility and the Texas Liability Insurance Card
A person may not operate a motor vehicle in Texas unless financial responsibility is established for that vehicle through one of the methods listed in Tex. Transp. Code §601.051. Texas law allows a motorist to establish financial responsibility through motor vehicle liability insurance, a surety bond, a deposit made with the state comptroller, a deposit made with a county judge, or self-insurance (Tex. Transp. Code §601.051). When selecting an auto liability policy to meet this mandate, the coverage must provide minimum liability limits of at least $30,000 for bodily injury or death of one person, $60,000 for bodily injury or death of two or more persons, and $25,000 for property damage in a single collision (Tex. Transp. Code §601.072(a-1)).
For each motor vehicle insurance policy, a liability insurer must issue a standard proof of motor vehicle liability insurance form titled 'Texas Liability Insurance Card' (28 TAC §5.204(b)). The insurer may use its own standard proof form or the prescribed form available from the Texas Department of Insurance (28 TAC §5.204(b)). Drivers can exhibit evidence of financial responsibility as a physical document or as an image displayed on a wireless communication device (Tex. Transp. Code §601.053(a)(2-a)). Displaying insurance information on a wireless communication device does not provide consent for law enforcement officers to access any other contents of that device (Tex. Transp. Code §601.053(d)).
Texas Department of Insurance rules establish strict typography and content standards for both sides of the card. Side A must be printed in at least 10-point type, except where otherwise specified, and must be provided in English, or in both English and Spanish (28 TAC §5.204(c)). Side A must state the name and address of each insured or covered person (28 TAC §5.204(c)(1)), the policy number (28 TAC §5.204(c)(5)), the effective date and expiration date (28 TAC §5.204(c)(3)-(4)), and the year, make, and model of each covered vehicle or a description of vehicle types covered, with the vehicle identification number (VIN) included at the company's option (28 TAC §5.204(c)(2)). Side A must also list the name and toll-free phone number of the insurer if statute requires the insurer to maintain one (28 TAC §5.204(c)(6)), the agent's name and phone number if applicable (28 TAC §5.204(c)(7)), and a statement in at least eight-point type certifying that the policy meets the minimum amounts required by the Texas Motor Vehicle Safety Responsibility Act (28 TAC §5.204(c)(8)).
Side B must also be written in at least 10-point type, except that it must state 'Texas Liability Insurance Card' in at least 12-point, boldfaced type (28 TAC §5.204(d), (d)(1)). Side B must inform drivers that failure to meet financial responsibility requirements can result in a fine of up to $1,000, suspension of driver's license and vehicle registration, and vehicle impoundment for up to 180 days at $15 per day (28 TAC §5.204(d)(5)). The insurer must issue Side B in English and make it available in Spanish either on the same card or on a separate card (28 TAC §5.204(e)). If the insurer initially provides only the English version of Side B and offers a separate Spanish card upon request, it must include the required Spanish notice with the English version in at least 10-point type (28 TAC §5.204(e)).
Common mistakes
- An insurer may not cancel a personal automobile policy on this ground if the named insured consents to an endorsement terminating coverage for the person whose license or registration was suspended or revoked (Tex. Ins. Code §551.104(d)).
- Believing that PIP subrogation is completely prohibited in all situations; an insurer may subrogate if the at-fault operator failed to establish financial responsibility on the date of loss (Tex. Ins. Code §1952.155(c)).
- Confusing the proof of claim window with the covered expense window under PIP; expenses are covered if incurred up to the third anniversary of the accident, while the policy may set a minimum deadline of not less than six months for presenting the original proof of loss (Tex. Ins. Code §§1952.151, 1952.156(b)(1)).
- Thinking the insured must pay two full deductibles when using both collision and UM property damage coverage; you only pay the primary deductible plus any positive difference between the secondary and primary deductibles (Tex. Ins. Code §1952.107(c)).
Key points
- A motor vehicle liability insurance policy used to establish financial responsibility in Texas must meet minimum limits of $30,000 for bodily injury or death of one person, $60,000 for bodily injury or death of two or more persons, and $25,000 for property damage in one collision (Tex. Transp. Code §601.072(a-1)).
- The Texas Liability Insurance Card generally requires at least 10-point type, with the required Side A statement in at least eight-point type and the Side B title in at least 12-point boldfaced type; a separate Side B statement describes potential penalties for noncompliance (28 TAC §5.204(c), (d)).
- Applicable Texas automobile liability policies must provide PIP unless a named insured rejects it in writing; §1952.153 does not require an insurer to provide more than $2,500 in aggregate benefits per person, and covered reasonable expenses must be incurred no later than the third anniversary of the accident (Tex. Ins. Code §§1952.151.153).
- PIP subrogation is generally prohibited, but the insurer has a right against a person causing or contributing to the collision if, on the date of loss, financial responsibility had not been established for a motor vehicle involved in the collision and operated by that person (Tex. Ins. Code §1952.155(b), (c)).
- UM/UIM coverage must be provided unless a named insured rejects it in writing; recovery under uninsured motorist coverage when the vehicle's owner or operator is unknown requires actual physical contact, and UM/UIM property damage coverage must be offered subject to a $250 deductible (Tex. Ins. Code §§1952.101(c), 1952.104(3), 1952.105(b)).
- The specified cause-based cancellations take effect no sooner than 10 days after notice is mailed, while nonrenewal and 12-month anniversary cancellation require 60-day notice; material changes require the notices specified in §551.1055, and personal-auto renewals with a change in coverage must also satisfy §551.105’s 60-day requirement.
The full lesson continues with 3 more sections with exam tips, audio in English and Spanish and 5 Check yourself questions.
- 1 month
$53.99$26.99 - 3 months
$158.99$79.49 - Lifetime
$323.99$161.99
One payment, no subscription.
See Property and Casualty plansAlready a member? Log in
25 practice questions on this exam
Each Property and Casualty practice test has 25 original questions with the answers explained. No account needed.
Open the Property and Casualty practice testsOriginal lesson written for Property and Casualty Insurance practice · updated October 30, 2026. Exam names are trademarks of their owners; tests.global is not affiliated with them.