Proof of Financial Responsibility

Introduction

The Texas Motor Vehicle Safety Responsibility Act establishes requirements for evidence of financial responsibility, penalties for non-compliance and a standard proof of liability insurance form promulgated by the Texas Department of Insurance.

When Evidence is Required

Evidence of financial responsibility must be shown in order to obtain a vehicle registration (license plates or tags), new or renewal drivers license, vehicle inspection or at the request of an officer in the event of an accident or otherwise. Exceptions:

  1. Auto dealers are not required to obtain evidence from the purchaser of a vehicle at the time of sale.
  2. The Department of Public Safety is not required to obtain proof of insurance when renewing a drivers license.

What Satisfies Evidence

A person can use any of the following to satisfy the financial responsibility requirements.

  1. A liability insurance policy or a photo copy of that policy.
  2. A standard proof of liability insurance form promulgated by the TDI.
  3. A certificate or copy of a certificate issued by the state treasurer, Department of Public Safety or a county judge, that shows that the owner of the vehicle has on deposit money or securities to meet the amount required by the act.

Fines and Penalties

A first offense is considered a misdemeanor punishable by a fine or not less than $175.00 or more than $350.00.

A second offense is also a misdemeanor subject to a minimum fine of $350.00 and not more than $1,000.

However, if the court determines the person is economically unable to pay, the court may reduce the fine to less than $175.00.

On a second or subsequent conviction the court shall order impoundment of the vehicle for 180 days at a cost of $15.00 a day. The court cannot release the vehicle unless the defendant applies to the court for release and submits evidence of financial responsibility that covers a two year period. In addition, a second or subsequent conviction shall also carry a suspension of drivers license and registration unless the defendant establishes and maintains proof of financial responsibility for two years from the date of conviction.

Minimum 30-Day Binder

A binder or identification card issued in conjunction with a new application must be issued for a minimum of 30 days if it is to be used as evidence of financial responsibility. The Texas Insurance Code states that binders and ID cards issued for a period of less than 30 days must contain the following statement:

"Texas law prohibits use of this document to obtain a motor vehicle inspection certificate, an original or renewal drivers' license, or an automobile registration or license plates." In addition, the law requires the following written disclosure by the agent before accepting any premium for a policy or binder for a term of less than 30 days: "Texas law prohibits use of this policy or binder to obtain a motor vehicle inspection certificate, an original or renewal drivers license, or an automobile registration or license plates."

Promulgated Auto ID Cards

The Texas Department of Insurance promulgated a new auto ID card to be used by all insurance companies for all motor vehicle insurance policies effective on or after September 1, 1991.

An insurer has the option of providing an English/Spanish (bilingual) card, 2 separate cards (one in English, one in Spanish) an English card and with a Spanish notice stating a Spanish card is available on request, or a card that is English on the front and Spanish on the back.

The ID card rules as published by the TDI are as follows:

For all motor vehicle insurance policies which become effective on or after September 1, 1991:

(1) A standard proof of liability insurance form, titled "Texas Liability Insurance Card", shall be issued by each liability insurer. The Texas Liability Insurance Card shall contain all of the following languages as explained in sections 3­4.

(2) Side A of the form, shall be written in the English language or, at the option of the insurer, can be written in English and Spanish. It shall be at least 10-point type, except for the language in (2)(h) of this rule. The entire text shall be in upper and lower case letters. Side A of the form shall include the following:

(a) INSURED—name and address of each insured or covered person;

(b) VEHICLE—year, make and model of each covered vehicle; and, at company's option, VIN (NOTE: If the policy does not require the description of a vehicle, then this block should contain the appropriate wording which will describe the types of vehicles for which coverage is afforded - i.e. "any auto driven by the insured", "any auto driven with dealer plates" or similar descriptive language). However, this language is not addressed in the financial responsibility law, and individual law enforcement officers may not accept the ID cards;

(c) EFFECTIVE DATE—display effective date of the policy;

(d) EXPIRATION DATE—display expiration date of policy;

(e) POLICY NUMBER—display number;

(f) INSURANCE COMPANY—name and toll-free number of insurer, if the insurer is required by statute to maintain a toll-free number for consumer inquiries;

(g) AGENT—name and phone number of the agent, if applicable;

(h) the following statement: This policy provides at least the minimum amount of liability insurance required by the Texas Motor Vehicle Safety Responsibility Act for the specified vehicles and named insureds and may provide coverage for other persons and other vehicles as provided by the insurance policy.

(3)Side B of the form shall be entitled "Texas Liability Insurance Card."

(a) Side B shall contain the following language:

(Contact IIAT for details)

(b) The format explaining when a card may be required cannot be changed. That is, the card shall use bullets (·) and list the places a card might be requested in a vertically descending manner.

(4) At its option, the insurer shall do one of the following:

(a) Provide to the insured a Texas Liability Insurance Card in which the text of Side B is in English and Spanish:

(b) Provide to the insured two separate cards, one in English, the other with Side B in Spanish;

(c) Provide to the insured a Texas Liability Insurance Card in English and with that mailing include a notice in Spanish regarding the availability of a Texas Liability Insurance Card in Spanish. The notice shall include all the language required for Side B, in the same manner as required for Side B. The notice shall also inform the insured that he or she can obtain a Spanish Texas Liability Insurance Card by calling the company's toll-free number, the insured's agent, or any other applicable number. This last information shall appear as follows: "Importante: Si usted quiere una tarjeta oficial escrita en español, llame a este numero:" and shall be followed by the company's toll-free number. This shall appear in at least 10-point type with the word "IMPORTANTE" appearing in bold-face and upper-case letters. Upon request, the company shall furnish Spanish cards in compliance with (a) or (b) of this Section.

(d) Provide to the insured a Texas Liability Insurance Card in which the text of both Sides A and B are in Spanish and English.