Texas car accident laws put financial responsibility on the driver who caused the crash, give injured people two years to sue, and bar any recovery if you were more than 50 percent at fault. Those three rules shape almost every decision you’ll make after a collision, from the call you place at the scene to the settlement check you eventually accept. The state also sets minimum insurance limits, defines what you can recover, and spells out what happens if you leave the scene. Knowing the structure before you need it is worth more than any single tactic afterward.
How Fault Determines Who Pays
Texas is an at-fault state. The driver responsible for the crash is financially responsible for everyone else’s losses, which is different from the no-fault states where each driver turns first to their own insurer. You have three practical options after a wreck: file a claim against the at-fault driver’s insurance, file against your own insurer and let them pursue the other driver, or sue the other driver directly. Which route makes sense depends on the facts and on how cooperative the other side’s carrier turns out to be.
Shared blame is where this gets sharp. Texas uses a 51 percent bar: if you’re found more than 50 percent responsible for the accident, you recover nothing.1State of Texas. Texas Civil Practice and Remedies Code 33.001 – Proportionate Responsibility Zero, regardless of how badly you were hurt. If your share is 50 percent or less, you can still recover, but the award is cut by your percentage of fault. A driver awarded $100,000 who was 20 percent at fault takes home $80,000.2State of Texas. Texas Civil Practice and Remedies Code 33.012 – Amount of Recovery
Because a small shift in that percentage can be the difference between a reduced payout and nothing, the fight over fault dominates most accident claims. Police reports, dashcam video, witness statements, and sometimes accident reconstruction all feed into it. Adjusters understand this math well and routinely push to lift a claimant’s fault share across the 50 percent line.
The Two-Year Deadline to File
You have two years from the date of the accident to file a personal injury lawsuit in Texas. The same two-year window covers property damage claims. If the collision caused a death, the clock starts on the date the person died rather than the date of the crash.3State of Texas. Texas Civil Practice and Remedies Code 16.003 – Two-Year Limitations Period
Two years sounds like plenty of time until you’re inside it. Treatment stretches out, records trickle in, and negotiations with an insurer can drag for months. Miss the deadline and the court will almost certainly dismiss the case, no matter how clear the other driver’s fault was. There’s no grace period. The practical consequence shows up well before the two-year mark: an insurer that no longer faces a lawsuit threat has little reason to settle fairly, so the statute of limitations is effectively the clock on your negotiating position too.
What You Must Do at the Scene
Every driver in a collision has to stop, regardless of who caused it. If anyone is hurt or might be, you must stop immediately, check whether anyone needs help, and stay until you’ve exchanged the required information.4State of Texas. Texas Transportation Code 550.023 – Duty to Give Information and Render Aid Even in a damage-only wreck with no injuries, the duty to stop still applies.
You’re required to share the following with the other driver and any injured person:
- Your name and address
- Your vehicle’s registration number
- The name of your liability insurance company
- Your driver’s license, if the other party asks and you have it on you
You also have to give reasonable assistance to anyone injured, which can mean calling for medical help or taking them to a hospital if treatment appears necessary.
Reporting the Collision
If the crash caused injury, death, or damage severe enough that a vehicle can’t be driven safely, the driver has to notify authorities immediately by the fastest available means.5State of Texas. Texas Transportation Code 550.026 – Immediate Report of Collision Inside city limits that means local police; outside, it’s the county sheriff or the nearest Texas Department of Public Safety office. That report creates the official record insurers and courts rely on later. Skipping it leaves a gap in documentation the other side can use against you.
Hit-and-Run Penalties
Leaving the scene is treated seriously, and the penalties track the severity of the outcome. Fleeing a crash that caused a death is a second-degree felony. A crash involving serious bodily injury is a third-degree felony. For collisions with less severe injuries, the penalty can reach up to five years in state prison, up to a year in county jail, a fine of up to $5,000, or a combination.6State of Texas. Texas Transportation Code 550.021 – Collision Involving Personal Injury or Death Texas prosecutors pursue these cases aggressively.
Required Insurance Coverage
Every driver in Texas has to maintain financial responsibility, almost always through a liability policy.7State of Texas. Texas Transportation Code 601.051 – Requirement of Financial Responsibility The statutory minimum is written as 30/60/25:
- $30,000 for bodily injury or death of one person in a single collision
- $60,000 total for bodily injury or death of two or more people in a single collision
- $25,000 for property damage in a single collision8State of Texas. Texas Transportation Code 601.072 – Minimum Coverage Amounts
You have to carry proof of insurance whenever you drive. A first offense without valid financial responsibility is a misdemeanor carrying a fine of $175 to $350. A second or later offense runs $350 to $1,000. If you actually had valid insurance at the time of the stop but couldn’t produce proof, you can present that evidence in court and get the charge dismissed.9State of Texas. Texas Transportation Code 601.191 – Operation of Motor Vehicle in Violation of Motor Vehicle Liability Insurance Requirement
Those minimums are low against real accident costs. A single ER visit with surgery can clear $30,000, and a totaled late-model vehicle can run past $25,000. A driver who carries only the minimum is personally on the hook for anything above the limit.
Uninsured and Underinsured Motorist Coverage
Texas requires every auto insurer to include uninsured and underinsured motorist coverage (UM/UIM) in every liability policy it writes. The coverage pays when the other driver has no insurance or carries limits too low to cover your losses. You can reject it in writing, and once rejected, the insurer doesn’t have to add it back to future renewals unless you specifically ask.10State of Texas. Texas Insurance Code 1952.101 Roughly one in eight Texas drivers is uninsured, so the gap this coverage fills is real. Without it, your only recourse against an uninsured driver is a personal lawsuit, and collecting from someone who couldn’t afford insurance in the first place is hard.
What You Can Recover
Texas splits compensatory damages into two categories. Economic damages cover losses with a dollar figure attached: medical bills, rehabilitation, lost wages, reduced earning capacity, and property repair or replacement. These are built from receipts, pay stubs, and billing records.11State of Texas. Texas Civil Practice and Remedies Code 41.001 – Definitions
Non-economic damages cover harm that doesn’t come with a receipt: physical pain, mental anguish, disfigurement, physical impairment, loss of companionship, and loss of enjoyment of life.11State of Texas. Texas Civil Practice and Remedies Code 41.001 – Definitions Severity and duration drive the number. A broken arm that heals in six weeks produces a very different award than a spinal injury that limits mobility for life.
Texas does not cap compensatory damages in standard accident cases. The cap that exists applies only to exemplary damages, sometimes called punitive damages, which punish especially reckless or malicious conduct rather than compensate specific losses. Exemplary damages are limited to the greater of $200,000 or two times your economic damages plus up to $750,000 in non-economic damages.12State of Texas. Texas Civil Practice and Remedies Code 41.008 In accident cases these usually come up only with drunk driving, extreme recklessness, or intentional conduct. A routine negligence case where someone ran a red light typically doesn’t trigger them.
Taxes on a Settlement
Federal law excludes from taxable income any damages you receive for physical injuries or physical sickness, whether through a settlement or a verdict.13Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness That exclusion covers medical expenses, pain and suffering tied to the physical injury, and emotional distress flowing from a physical injury. For most car accident settlements, the bulk of the payment lands in this tax-free category.
Several pieces of a settlement are taxable:
- Compensation for lost wages is taxable and may be subject to Social Security and Medicare taxes.
- Punitive damages are always fully taxable, regardless of the underlying injury.
- Interest that accrues on a settlement paid over time is taxable income.
- Emotional distress not tied to a physical injury is taxable, though you can offset the taxable amount by medical expenses you incurred treating that distress.
How the settlement agreement allocates the money across these categories matters. A lump sum that doesn’t specify what portion covers physical injuries, what covers lost wages, and what covers punitive damages creates ambiguity the IRS can read against you. Nail down the allocation in the settlement documents before signing.