Limited Auto Insurance in Texas is now being called “Junk Policies”
The new Texas insurance law aims at shedding more light on the limited auto insurance that covers only one driver rather than covering anyone who drives the vehicle. Insurance policies with “named drivers” are now required to elaborate the extent of the coverage and the names of the drivers that are being covered under the insurance.
These kinds of policies are commonly called “junk” policies because the coverage of the insurance is often restricted to only one person. The rest of the family members are not covered. This means that any other person in the family is not under insurance protection when driving the vehicle. This is of great concern to Texans as it exposes other motorists who might be hit by a driver that is not insured.
There are around 1.2 million people in Texas with “named driver” insurance policies. This number is increasing because junk policies are cheaper than conventional auto insurance provided by standard and preferred auto insurance companies.
The law now requires that the limit of the protection must be mentioned clearly on the insurance ID form. The insurance companies offering “named driver” policies are now required to mention to the policyholders orally and in writing that the policy covers no one else in the household.
Most Texans buy conventional auto insurance from standard and preferred auto insurance companies like Travelers and The Hartford. The auto policies offered by these companies provide coverage regardless of who is driving as long as they have permission from the owner of the vehicle. Unfortunately these types of policies are more expensive than the “named driver” policies and many Texans are opting for the cheaper auto insurance not knowing the coverage limitations.
Junk policies are being changed in Texas because of the increasing number of horrific accidents where the driver later realizes that he is not covered by insurance due to the limited insurance coverage. The law is being changed to save drivers from a lot of confusion and liability. The aim of this law is to educate the policyholders about the insurance policies and the limits of its coverage.