What Insurance is required by Law?

When we take on the exciting new adventure of living in a new state we rarely think about how our insurance may be affected.  We know we need it but What Insurance is Required by Law? 

Insurance requirements vary from state to state so I’m going to tell about Texas and their current regulations.  When purchasing that brand-new car or that dream home for you and your family there are a couple of things to keep in mind to stay insured and legal.  I have broken these requirements by insurance type:


As a Texas driver, state law requires that you purchase and maintain auto insurance as an indication of your proof of financial responsibility. In fact, you will not be able to register your vehicle with the State of Texas without furnishing proof that your vehicle is currently insured in your name. The minimum levels of auto insurance coverage that are mandated by Texas law are $30,000 in bodily injury coverage per person, $60,000 in bodily injury coverage total per incident and $25,000 in property damage coverage per incident.

State law does not require you to purchase additional insurance policies such as uninsured motorist or personal injury protection but keep in mind liability insurance only covers damage to other people’s vehicles, not yours so talk to an agent about the right coverage for you.

Once you acquire auto insurance, you will need to carry proof that you are insured whenever you drive in Texas. In most cases, your insurance company will furnish you with an insurance card that contains all pertinent information about your auto insurance policy. If you are not in possession of proof of insurance at all times while you are driving, you could face fines up to $350. Furthermore, if you are found guilty of a second offense, your driver’s license could be suspended and your fine could reach up to $1000.


When it comes to homeowners insurance, everything is certainly bigger in Texas. There are no Texas laws that enforce home insurance coverage, but lenders may require you to purchase home insurance coverage as a stipulation of your mortgage. Once the mortgage or lien is paid off, you can then decide to retain or drop the required coverage at your leisure.

Texas law states that while your bank lender can require homeowner’s insurance on your mortgaged home, the lender cannot request coverage that exceeds the value of replacing the dwelling and your personal possessions, regardless of the total mortgage loan amount. When determining the replacement cost of the home, the bank lender also cannot take the home’s fair market value into account, which could raise your overall coverage requirement.

If you do not qualify for insurance through private carriers then you may qualify for coverage through the Texas Fair Plan or Texas Windstorm Insurance Association.  Which allows those that are disqualified from standard markets to still purchase insurance and satisfy lender requirements.


If you live in a “special flood hazard area,” which means that you have a one-percent or higher risk of annual flood damage, your lender can require you to obtain flood insurance from the NFIP, or National Flood Insurance Program. You are also required to purchase flood insurance from the NFIP to qualify for Windstorm Insurance from the Texas Windstorm Insurance Association, but only if your home is in flood zones V, VE, or V1-V30.  The Federal Emergency Management Agency website provides flood zone maps for Texas counties for you to review before purchasing a property. https://www.fema.gov/


Life insurance is not required by law. There are scenarios where life insurance can be required such as a loan institution requiring you to carry a life insurance policy large enough to cover the debt in case of death. There are scenarios in court cases such as a divorce where life insurance is court ordered to cover alimony or child support. But overall, life insurance is not required by law.

Dustin Harwell is an Insurance Agent for Gibraltar Insurance Services