Moon Insurance · TDI license #5595
Texas insurance glossary
The words on a Texas insurance document, defined in one sentence each. Most of them come off a DPS notice, a declarations page or a court order, and most of them are worth knowing before you sign something. If a term turns out to be the whole problem — a filing, a suspension, a lapse — each entry links to the page that handles it.
80 terms. Every definition is sourced to the Department of Public Safety, the Texas Department of Insurance or the statute itself, and carries the date a human last checked it. Where a source has moved on and we have not, the date says so.
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- 30/60/25
- 30/60/25 is the shorthand for the minimum auto liability limits Texas requires: $30,000 for one injured person, $60,000 for a crash, and $25,000 for property damage.
A
- Actual cash value
- Actual cash value is what a vehicle was worth immediately before it was damaged, which is its replacement cost reduced by depreciation for age, mileage and condition.
- Administrative License Revocation
- Administrative License Revocation is the civil DPS process that suspends a driver's license after a DWI arrest, run separately from the criminal case and on its own timetable.
- At-fault
- Texas is an at-fault state, which means the driver who caused a crash is the one whose liability coverage pays for the harm done to everybody else.
B
- Binder
- A binder is temporary written evidence that insurance coverage is in force while the policy itself is being issued.
- Bodily injury liability
- Bodily injury liability is the part of an auto policy that pays other people for injuries the insured driver causes, up to a limit per person and a larger limit per crash.
- Broad form
- Broad form is market slang for a non-standard auto policy that follows a named person across vehicles rather than insuring a listed car for a household.
C
- Cancellation
- A cancellation is the termination of a policy during its term, by the insurer or by the policyholder, rather than at the end of the term.
- Certificate of self-insurance
- A certificate of self-insurance is a DPS-issued document letting an operator of a large fleet prove financial responsibility from its own resources instead of buying a policy.
- Chapter 601
- Chapter 601 of the Texas Transportation Code is the Motor Vehicle Safety Responsibility Act, the law requiring drivers to prove they can pay for harm they cause.
- Collision coverage
- Collision coverage pays to repair or replace the insured’s own vehicle after it hits another vehicle or an object, or overturns, whoever was at fault.
- Comprehensive coverage
- Comprehensive coverage pays for damage to the insured’s own vehicle from causes other than collision, such as theft, hail, fire, flood, vandalism and animal strikes.
- County mutual
- A county mutual is a Texas-only class of insurance company, and it is the form most non-standard and SR-22 auto policies in this state are actually written through.
D
- Declarations page
- The declarations page is the summary at the front of a policy naming the insured, the vehicles or property, the coverages, the limits, the deductibles and the term.
- Deductible
- A deductible is the amount of a claim the policyholder keeps: the insurer pays the covered loss above it, and nothing at or below it.
- Diminished value
- Diminished value is the amount a vehicle is worth less after an accident than it was worth before it, even once the repair has been completed properly.
- Driver Responsibility Program
- The Driver Responsibility Program was the Texas system of annual surcharges for certain convictions, repealed in 2019 with its outstanding surcharges waived.
- DUI
- In Texas, DUI is a separate offense for a driver under 21: operating a motor vehicle in a public place with any detectable amount of alcohol in the system.
- DWI
- DWI is driving while intoxicated: the Texas offense of operating a motor vehicle in a public place while intoxicated, under Penal Code § 49.04.
E
- Electronic filing
- Electronic filing is how an insurer transmits an SR-22 to the Department of Public Safety directly, rather than by mailing a paper certificate.
- Endorsement
- An endorsement is a document that changes a policy — adding, removing, restricting or clarifying coverage — and becomes part of the contract once it is issued.
- Essential need license
- Essential need license is the everyday name for an occupational driver license, taken from the statutory test the petitioner has to satisfy.
- Exclusion
- An exclusion is a clause naming something the policy does not cover, and it operates by carving that thing back out of coverage the policy has already granted.
F
- Failure to appear
- Failure to appear is a DPS program that blocks renewal of a driver license when a court reports that a person has missed a court date or not paid a fine.
- Financial responsibility
- Financial responsibility is the Texas requirement that a person be able to answer for the damage they cause with a vehicle, most commonly satisfied by a liability policy.
- FR-44
- FR-44 is a high-limit financial responsibility filing used by Florida and Virginia after alcohol-related convictions, and Texas does not issue or require it.
- Full coverage
- Full coverage is a market phrase rather than a policy: it usually means liability plus collision and comprehensive, and no policy sold in Texas covers every loss.
G
- Gap insurance
- Gap insurance pays the difference between what a totaled vehicle was worth and what is still owed on it, where the loan balance is the larger number.
- Grace period
- A grace period is time after a due date in which a payment can still be made without the policy ending, and a Texas auto policy often has none at all.
H
- High-risk driver
- High-risk driver is a market label rather than a legal status, describing a driver whose record puts them outside the appetite of standard insurers.
I
- Ignition interlock device
- An ignition interlock device is a court-ordered breath tester wired into a vehicle, which prevents the engine starting unless the driver provides a clean specimen.
- Implied consent
- Implied consent is the Texas rule that driving on a public road counts as agreeing to give a breath or blood specimen when lawfully arrested for an offence involving intoxication.
- International driving permit
- An international driving permit is a translation of a valid foreign license, and it carries no driving privilege of its own in Texas or anywhere else.
- ITIN
- An ITIN is an Individual Taxpayer Identification Number the IRS issues to people who must file US taxes but cannot get a Social Security number.
L
- Lapse
- A lapse is any period with no auto policy in force, whether the policy was cancelled, not renewed, or simply never paid.
- Liability coverage
- Liability coverage is the part of an auto policy that pays other people for injury or damage the insured driver causes; it repairs nothing belonging to the insured.
- License Eligibility
- License Eligibility is the Texas DPS online system that shows a driver what is on their own record and what is required before a license becomes valid again.
- Lienholder
- A lienholder is the lender with a financial interest in a vehicle it financed, listed on the title and on the insurance policy until the loan is paid.
- Lloyd’s plan
- A Lloyd’s plan is a Texas company form in which underwriters write insurance through an attorney-in-fact, and it appears on many Texas home and auto policies.
M
- Medical payments
- Medical payments coverage pays medical and funeral expenses for the insured and their passengers after a crash, regardless of who was at fault, up to a stated limit.
N
- Named driver policy
- A named driver policy is an auto policy that does not provide coverage for a person residing in the insured’s household unless that person is named on the policy.
- Named insured
- The named insured is the person or business actually named on the policy, who owns the contract, pays for it and holds the rights it grants.
- Non-owner SR-22
- A non-owner SR-22 is the same certificate riding on a non-owner liability policy, written for a driver who owes proof of financial responsibility but has no vehicle of their own.
- Non-renewal
- A non-renewal is the insurer declining to continue a policy at the end of its term, as distinct from a mid-term cancellation or a declination that never issued at all.
- Non-standard auto
- Non-standard auto is the market segment for drivers the preferred market declines or prices badly, after tickets, at-fault crashes, a lapse, or no prior insurance.
O
- Occupational driver license
- An occupational driver license is a restricted Texas license that lets a suspended driver operate a non-commercial vehicle for work, school or essential household duties.
- Omitted driver
- An omitted driver is a household member deliberately removed from a policy by endorsement, so that nothing the policy covers applies while that person is driving.
- Operator’s SR-22
- An operator’s SR-22 is a certificate filed on a policy that covers the driver rather than a particular vehicle, which is the form a driver without a car normally files.
- Owner’s SR-22
- An owner’s SR-22 is a certificate filed on a policy written against vehicles the driver owns, and it has to cover every vehicle registered to that driver.
P
- Permissive use
- Permissive use is coverage that follows a vehicle to a driver who is not on the policy but had the owner's permission to be behind the wheel.
- PIP
- PIP, or personal injury protection, is auto coverage that pays the insured’s own medical expenses and a share of lost income after a crash regardless of who was at fault.
- Policy limits
- Policy limits are the most an insurer will pay under a given coverage, stated per person, per occurrence, or per policy period on the declarations page.
- Policy period
- The policy period is the span of time the coverage runs for, shown on the declarations page as a start date and an end date with times attached.
- Premium
- A premium is the amount charged for an insurance policy for a stated term, calculated from a carrier’s rates as filed with the Texas Department of Insurance.
- Premium finance
- Premium finance is a loan that pays your insurance premium up front so you can repay it monthly, arranged through a company licensed separately from the insurer.
- Proof of insurance
- Proof of insurance is the evidence a Texas driver must be able to show on request that financial responsibility is established for the vehicle they are operating.
- Property damage liability
- Property damage liability is the part of an auto policy that pays for damage the insured driver causes to other people’s property, most often another vehicle.
- Proportionate responsibility
- Proportionate responsibility is the Texas rule that splits fault for a crash between everyone involved as percentages, and bars recovery by anyone more than fifty per cent responsible.
R
- Rebuilt title
- A rebuilt title is the Texas title issued for a salvage vehicle that has been repaired and inspected, branded so that the history stays with the vehicle.
- Reinstatement fee
- A reinstatement fee is the amount the Texas Department of Public Safety charges before it will reissue a driver license that has been suspended or revoked.
- Renewal
- A renewal is the insurer offering a new policy period on the existing policy, usually with a revised premium, which takes effect if the offer is accepted and paid.
- Rental reimbursement
- Rental reimbursement is optional coverage that pays a daily amount toward a hire car while your own vehicle is being repaired after a covered claim.
- Revoked license
- A revoked license is a driving privilege the state has cancelled outright rather than paused, so the driver must apply again rather than wait it out.
- Rider
- A rider is an amendment attached to a policy that changes what it covers, which in Texas auto insurance is more often called an endorsement.
- Roadside assistance
- Roadside assistance is optional coverage that pays for towing and on-the-spot help — a jump start, a tyre change, a lockout — when a vehicle will not go.
S
- Salvage title
- A salvage title is the Texas ownership document for a vehicle damaged badly enough that its repair cost approaches its value, or brought in on an out-of-state salvage document.
- SR-22
- An SR-22 is a certificate a Texas insurer files with the Department of Public Safety to prove a driver carries at least the minimum liability coverage Chapter 601 requires.
- SR-22A
- An SR-22A is the Texas-only version of the certificate, ordered by a court, which additionally requires six months of premium to be paid in advance before the filing is made.
- SR-26
- An SR-26 is the notice a carrier files with the Department of Public Safety when a certified SR-22 policy is cancelled, terminated or allowed to lapse.
- Subrogation
- Subrogation is an insurer's right to step into its own customer's shoes and recover what it paid out from whoever actually caused the loss.
- Surcharge
- A surcharge is an amount added to an insurance premium for a rated event such as an at-fault crash or a conviction.
- Surplus lines
- Surplus lines insurance is coverage bought from an insurer not licensed in Texas, permitted when the risk cannot be placed with a licensed company on reasonable terms.
- Suspended license
- A suspended license is a driving privilege the state has withdrawn for a stated period, which returns once the cause is cleared and the requirements are met.
T
- TAIPA
- TAIPA is the Texas Automobile Insurance Plan Association, the state's assigned-risk pool that places basic auto liability for drivers no ordinary insurer will write.
- TDI
- TDI is the Texas Department of Insurance, the state agency that licenses agents and carriers, reviews rates and policy forms, and publishes consumer guidance.
- TexasSure
- TexasSure is the state vehicle insurance verification program, which matches registered Texas vehicles against insurance policy data reported by carriers.
- Total loss
- A vehicle is a total loss when the cost to repair it, sometimes with the salvage value added, meets or exceeds what the vehicle was worth before the damage.
- TxDPS
- TxDPS is the Texas Department of Public Safety, the agency that issues driver licenses, records suspensions, and receives SR-22 filings from carriers.
U
- Underinsured motorist
- Underinsured motorist coverage pays the insured when the at-fault driver does carry liability insurance but does not carry enough of it to cover the loss.
- Uninsured motorist
- Uninsured motorist coverage pays the insured for injury and damage caused by a driver who has no liability insurance, or by a hit-and-run driver who is never identified.
If the word is the problem
A definition tells you what a thing is called. It does not file anything. If what you actually have is a deadline — an SR-22 due, a license to get back, a policy that lapsed — one independent agency on FM 1959 can tell you what is required before you commit to anything.