Out Of State Auto Insurance

What if someone in Mesquite, Garland, Keller, Flower Mound, Haslet, Newark, Benbrook, Hutchins, Dallas, Fort Worth, Arlington, Grand Prairie, or Rockwall is involved in an accident with a driver from Arkansas or some other state? Does that other state insurance have to pay a claim here in Texas if the driver is a family member and the other state’s policy allows an exclusion for family members? Let’s see what Texas says.
The best guidance for the above situation is found in a 1992, Austin Court of Appeals case. The style of the case is, National County Mutual Fire Insurance Company and Consumers County Mutual Insurance Company v. Randall Johnson.
The question in the case for the court to decide was: Does a family-member exclusion in an automobile insurance policy contravene the public policy set forth in the Texas Safety Responsibility Act, which requires liability insurance coverage for all damages that arise out of the operation of a motor vehicle?
The general rule is that a policy of insurance issued in another state to one of its insured’s immediately converts to the minimum of what Texas requires when the out of state driver enters Texas. With this in mind, look at what the court did in the above case.
Randall Johnson was driving his car when he caused an accident wherein his passenger, his wife, was injured. His insurance company, National County Mutual Insurance Company (National) denied his wife’s claim for benefits and his claim for coverage based on the National policy excluding coverage for family members.
Reading from the case, National rebuffed demands from Johnson and informed him they would not unconditionally defend him. Rather, its defense would be subject to a reservation of its rights to deny coverage and payment of any judgment rendered against him.
Johnson advised National that he would not accept any reservation of rights and repeated his demand for a full and unconditional defense. He asserted his rights under the Texas Safety Responsibility Act which requires that an owner’s automobile liability policy pay “all sums which the insured shall become legally obligated to pay,” and that their spousal / family member exclusion was invalid. The trial court and this appeals court upheld Johnson’s position.
The Texas Safety Responsibility Act requires that “all sums” in that act means nothing less than all sums, ruled the court.
The following are a couple of quotes from the court.
“When the legislature specifies a particular extent of insurance coverage, any attempt to void or narrow such coverage is improper and ineffective.” “Past attempts by the State Board of Insurance to narrow a legislatively prescribed scope of coverage have been invalidated.” They then said the endorsement in this policy is an attempt to narrow coverage in contravention of the law and therefore is invalid.
So, the answer to the opening question is yes, there is the same coverage provided, though it would be the minimal amounts in Texas. Even though the other state, in our example Arkansas, may not have to provide coverage for family members if an accident by an insured occurs in Arkansas, if the accident occurs in Texas there is coverage. It is just limited to the minimum amounts required by Texas laws.
Accidents with drivers who are from out of state but are in Texas for work, vacation, or any other reason, who have an accident here complicates matters for the injured Texan. An experienced Insurance Law Attorney can help navigate this unfamiliar area so that the Texan does not get mislead and taken advantage of by the out of state insurance company.