If you are a Texas motorist who carries state mandatory minimum auto insurance, you can expect a 2-3% increase in your auto insurance premiums in 2011.
The Texas Department of Insurance has mandated the current auto insurance liability limits be increased to 30/60/25 from 25/50/25.
The rollout of this plan is expected to take two years as car insurance companies release their new products (with higher minimums) and renew existing minimum limit policies with the new higher limits.
States increase their mandatory minimum liability limits to keep up with the rising costs of repairing damaged vehicles and medical care.
What to Expect
Your liability limits will automatically increase if you purchased an auto insurance policy with the old minimum limits prior to the New Year.
And you will likely side-step the rate increase until your next renewal.
If you happened to purchase a 12-month policy versus a six-month policy, you will be insulated against the increased rates for a little while longer.
This means if you purchased a new policy in December with 25/50/25 limits, and caused an accident this January, the injured party would be able to collect damages in the amount of 30/60/25, even though you didn’t have to pay any extra for the increased coverage.
If you purchase a new policy after January 1, 2011, your insurance premium will already reflect the higher limits and any accompanying rate increase… assuming your insurer actually increased rates as a result of this change.
What’s Not Automatically Changing
If you purchased the minimum limit UM and UIM coverage of 25/50/25 prior to January 1, 2011, your policy’s UM/UIM limits WILL NOT automatically adjust to the higher limits of 30/60/25 in the same manner your bodily injury and property damage limits increase.
Basically, there is no provision in the financial responsibility laws for Texas that states UM/UIM limits have to increase mid-term (after a policy has already been issued).
So insurance companies are not likely to give you the increased limit as a “freebie.”
This is important because UM and UIM coverage is designed to reimburse YOU for bodily injury and property damage you suffer as a result of an accident that was not your fault.
For example, if you were injured in an auto accident by a driver who had no insurance, or not enough insurance, your own insurance company will award you damages (and likely subrogate, or “go after” the at-fault party in court).
If you want the higher UM/UIM limits; you must request the coverage increase through your insurer or insurance agent.
Contact your insurance company or an independent insurance agent if you are unsure about your current auto insurance policy limits or if you want to increase your existing minimum UM/UIM limits to the new minimum for a policy purchased prior to January 1, 2011.
Read more: How insurance rates are determined.