Like each state in the U.S., Texas has its own set of statutes governing vehicle insurance that must be followed by both consumers and insurance companies alike. For drivers, these laws require that you, as a driver, be financially responsible for the losses sustained by others in any vehicle accident for which you are held liable. Most drivers cover this contingency by obtaining vehicle liability insurance to satisfy requirements of the state’s Financial Responsibility Law.
Texas also has a Consumer Bill of Rights regarding automobile insurance which is a breakdown of your rights as a consumer buying or maintaining vehicle insurance. This document has been adopted by the TX Department of Insurance (TDI) and – while not part of an auto insurance policy – it’s required that your insurance company include a copy of it when they issue Texas auto insurance.
Insurance Company Responsibilities
Insurance companies must follow state-mandated rules regarding how they conduct business and how they treat customers and potential customers. These include regulations regarding:
- Providing policyholders access, including a toll-free telephone number, for asking questions or making complaints.
- Refraining from making deceptive, misleading or false statements regarding their insurance.
- Refraining from requiring clients from purchasing excessive coverage.
- Adhering to the limitations set forth regarding non-renewal and cancellation of Texas auto insurance policies.
- Various other requirements as outlined by a total of 38 items found in the above cited Bill of Rights.
Canceling Your Texas Auto Insurance Policy
You have the right to cancel your auto insurance coverage at any time and, in most cases, can even receive a refund on any unearned premium if you’ve paid ahead for coverage that’s not yet been used. There may be a service charge from your insurer for canceling before the term of the policy is up. Most insurers require that you notify them in writing and in advance, sometimes as much as 30 days, of your intent to cancel.
Insurance Company Cancellations
Texas Insurance Code 551.104 lays out the guidelines under which an insurance company is authorized to cancel a policyholder’s auto insurance coverage. Insurers may cancel a policy if:
- The insured neglects to pay the required premium amount by its due date.
- The insured files a fraudulent claim.
- The insured’s driver’s license or car registration has been revoked or suspended. This also applies to other motorists in the household who operate the insured vehicle.
- TDI determines that, in continuing a particular policy, current insurance laws would be violated.
During the first 60 days of coverage, an insurer can cancel a policy for any legal reason, including a ticket, an accident, or other factors that may put you in the high risk category. Written notice of any cancellation must be sent at least ten days in advance of the effective cancellation date. After 60 days, only the above-outlined reasons can be used as cause for a cancellation.
If your auto insurance gets canceled or isn’t renewed, it’s important to immediately replace it with other coverage, and discuss high risk options with your agent. It’s illegal to drive without insurance as well as risky to your financial security.