Buyer Be Informed: Not All Auto Policies Are the Same

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Texas financial responsibility laws require all drivers to have liability coverage, but not all auto liability insurance policies are equal. Language, coverages, and exclusions vary from policy to policy. Be sure you know exactly who and what is covered under any insurance policy you consider purchasing.

 

The Texas Personal Automobile Policy (TPAP) was once the standard policy form used by insurance companies in Texas and is still preferred by many insurers. Today insurers may sell other auto policies that vary from the TPAP, but still fulfill the basic legal requirements for liability coverage. Some companies have added language to policies that enhance protections and offer broader coverage than the TPAP. In contrast, companies also offer policies that limit or reduce coverage.

 

Since the language, coverages, and exclusions contained in auto insurance policies differ, it is always important to read your policy thoroughly and make sure you are aware of any circumstances where your coverage may be less than you need or desire. Some policies may restrict coverage to certain drivers or vehicles or lack coverage that exists in the TPAP.

 

Below are examples of how policy coverage may be limited.

 

  • Some insurers sell policies that only cover certain drivers or specific vehicles that are identified on the policy. These policies oftenexclude coverage for any family or household member who is not listed by name on the application or policy declarations page.

 

  • Companies may attach a Named Driver Policy Endorsement to your private passenger automobile insurance policy. This endorsement excludes coverage for any family and household member who is not specifically identified on the endorsement.

 

  • A Named Driver Exclusion Endorsement excludes coverage for a person specifically named in the endorsement. Some companies are not eager to attach this endorsement to a policy, but all insurers must offer the Named Driver Exclusion to a policyholder who is in danger of being cancelled due to the actions of another insured on the policy.

 

Use OPIC’s Auto Policy Comparison tool to obtain more detailed information on coverage protections and limitations offered by insurance companies in Texas. The comparison tool allows you to evaluate as many as five different policy forms at one time. With side-by-side comparisons of how coverages and exclusions vary among companies, it is much easier to determine which policy is right for you.

 

David Nardecchia

 

In 1980, I went to work at the Texas Department of Insurance (TDI). Early in my career I found a passion for property and casualty insurance. To broaden the scope of my knowledge, I took numerous property and casualty insurance classes and achieved the Chartered Property and Casualty Underwriters (CPCU) designation in 1995. I retired from TDI in 2010 as the Deputy Commissioner of Personal and Commercial Lines of Insurance. I have always enjoyed helping others, including assisting with their insurance-related issues. In 2012, I had the opportunity to come to the Office of Public Insurance Counsel (OPIC). Today, I share my knowledge and experience to help empower insurance consumers.