P&C Rate Regulation and Auto Insurance

Texas P&C definitions and rate regulation

TDI’s property and casualty rules are in Chapter 5 of Title 28 of the Texas Administrative Code. The exam rarely asks about the Chapter 5 rules directly — but it tests the rate-and-form regime they support.

Rates file-and-use, forms filed for approval (TIC 2251.101, 2301.006)

Texas regulates most P&C rates through a file-and-use system: insurers file rates with TDI and may begin charging them on the date they are filed, subject to TDI’s authority to disapprove a rate that is excessive, inadequate, or unfairly discriminatory: within 30 days of the filing, or, for a rate already in effect, after a hearing (TIC 2251.101, 2251.103, 2251.104). The system sits between two alternatives — prior approval and no filing at all — and the Commissioner can require an insurer to file its rates for prior approval when its financial condition or rating practices call for supervision, or in a statewide insurance emergency (TIC 2251.151). Texas file-and-use applies to the lines TIC 2251.003 lists, among them personal and commercial auto, residential and commercial property, and general liability; workers’ compensation and title insurance are not on that list. Policy forms, by contrast, must be filed with and approved by the Commissioner before use; a filed form is approved 60 days after filing unless the Commissioner acts sooner (TIC 2301.006).

Texas auto insurance

Financial responsibility — minimum liability limits (Transportation Code § 601.071–.072)

Texas drivers must demonstrate financial responsibility — most commonly by carrying liability insurance — with minimum limits of:

• $30,000 bodily injury liability per person.
• $60,000 bodily injury liability per occurrence.
• $25,000 property damage liability per occurrence.

Written 30/60/25 in shorthand (Transportation Code § 601.072).

Uninsured/underinsured motorist coverage (TIC 1952.101–.110)

Texas insurers must offer UM and UIM coverage on every auto policy at limits the insured chooses, from the Transportation Code minimums up to the policy’s BI/PD liability limits (TIC 1952.101, 1952.105). Any named insured may reject UM/UIM, but only in writing — silence does not equal rejection. UM responds when an at-fault driver has no liability insurance; UIM responds when the at-fault driver’s limits are insufficient to cover the damages.

Personal injury protection (TIC 1952.151–.161)

PIP is a no-fault first-party coverage that pays reasonable medical and funeral expenses, lost income for an income producer, and the cost of essential household services for someone who was not, up to the PIP limit, regardless of who caused the accident (TIC 1952.151, 1952.155). Every Texas auto liability policy must include PIP unless any named insured rejects it in writing (TIC 1952.152), and the law does not require an insurer to provide more than $2,500 of PIP for each person (TIC 1952.153); $2,500 is the common limit. PIP is most useful when the insured wants medical bills paid quickly without waiting for liability investigations.

Renewal, nonrenewal, and cancellation (TIC 551.101–.113, .151–.152; TAC § 5.7002)

Texas regulates auto cancellation and nonrenewal carefully:

• Within the first 60 days of a new policy, the insurer may cancel for any reason (TIC 551.104(g)).
• After the first 60 days, cancellation is restricted to limited grounds: nonpayment of premium, a fraudulent claim, suspension or revocation of the driver’s license or vehicle registration of the named insured or a household or regular driver, or a department finding that continuing the policy would violate the law — each effective no earlier than 10 days after the notice is mailed (TIC 551.104(b), (d), (e)). An insurer may also cancel on any 12-month anniversary of the policy’s original effective date by mailing notice at least 60 days before (TIC 551.104(f)).
• Nonrenewal requires written notice mailed at least 60 days before the policy expires and must state the reason.
• Notice of changes on renewal. An insurer that reduces coverage or changes its conditions on renewal must give conspicuous written notice of each material change. For a personal auto policy, the notice of renewal with the change must be mailed at least 60 days before the policy expires, or the insurer must renew the policy at the insured’s request (TIC 551.105, 551.1055(e)).

Texas Automobile Insurance Plan Association — TAIPA (TIC 2151.051–.154)

TAIPA is Texas’s auto residual market — a state-mandated insurance plan that provides coverage to drivers who cannot obtain it through the voluntary market because of poor driving records, claim history, or other risk factors. Every insurer authorized to write automobile liability insurance in Texas must be a member of TAIPA, and TAIPA’s assessments on its members are in proportion to each one’s Texas automobile liability writings (TIC 2151.051, 2151.103). Drivers apply through a producer; the applicant and the servicing agent must certify that the applicant has been rejected by at least two insurers writing automobile insurance in Texas (TIC 2151.102).

TAIPA policies provide the minimum liability limits (30/60/25), and UM/UIM and PIP unless the named insured rejects them in writing (TIC 1952.101, 1952.152). According to TDI, TAIPA does not sell collision or comprehensive coverage or liability limits higher than state law requires, and its coverage costs more than coverage from other insurers. The goal of TAIPA is to ensure that a Texas driver who must show proof of financial responsibility can get coverage (TIC 2151.102).

Transportation network companies — rideshare (TIC Chapter 1954)

Texas regulates rideshare insurance under TIC Chapter 1954. The statute sets two coverage levels: one while the driver is logged on to the app and available for a ride, and a higher one during a prearranged ride, from the moment the driver accepts a ride until the last rider leaves the vehicle. The industry describes these as three periods:

• Period 1 — App on, waiting for ride request. Minimum required coverage: $50,000/$100,000 bodily injury and $25,000 property damage, plus uninsured/underinsured motorist coverage and PIP, unless rejected in writing (TIC 1954.052).
• Period 2 — Ride accepted, en route to passenger. Higher limits required: $1,000,000 combined single limit for death, bodily injury, and property damage, plus UM/UIM and PIP unless rejected (TIC 1954.053).
• Period 3 — Passenger in vehicle. Same $1,000,000 combined single limit.
• Either the TNC or the driver may carry the required coverage, and if the driver’s insurance has lapsed or falls short, the TNC must provide the required coverage from the first dollar of a claim (TIC 1954.051(d), 1954.054); in practice the TNC typically provides the higher limits for Periods 2 and 3 and the driver’s personal auto carrier may extend Period 1 with a TNC endorsement.