The Guide to Texas Car Accident Laws: What is the Total Loss Threshold?

Key Takeaways

• Texas is a fault-based state, which means the person responsible for the accident pays for the damages. 
• Underinsured motorist insurance covers the gap between what the other driver’s policy offers and the actual expenses. 
• Texas law requires you to report car accidents to law enforcement if there’s a death, injury, or property damage of $1,000 or more. 
• If you feel the insurance isn’t offering enough in the settlement, you can request an appraisal. 

If you drive in the Lone Star State, it’s important to understand Texas car accident laws. Getting into a car accident is stressful enough without worrying about the legal rules that follow. In this guide, we’ll cover everything you need to know, from what to do after an accident to what is considered a total loss and everything in between. 

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Is Texas a No-Fault State for Car Accidents?

No, Texas is a tort–or fault-based–state. The driver who caused the accident is financially responsible for the damages. That typically means the driver’s insurance pays for medical bills and property damage.

This is different from no-fault states, where each driver’s insurance covers their expenses regardless of who caused the crash. Because fault matters so much in Texas car accident laws, documenting the accident throughout and preserving evidence is critical to protecting your claim. 

One thing to keep in mind is that Texas also applies modified comparative fault. If you’re found partially at fault for the accident, your compensation is reduced by the percentage of your fault. For example, if you’re found to be 20% at fault, you’ll receive 20% less in compensation. If you’re 51% or at fault, you can’t recover anything from the other driver. Because of this, it’s important to never admit fault, even casually, at the scene. 

What Should You Do Right After a Car Accident in Texas?

Whether the accident is big or small, the moments after a crash, you’ll probably have a million worries running through your head. This checklist will help you follow the law and have the best outcome:

1. Stop and check for injuries: Texas auto accident laws require you to stop at the scene of any accident you’re in. Check yourself and your passengers, and call 911 if anyone is hurt. 
2. Move to safety: If your vehicle is drivable and it’s safe, move it out of traffic to prevent further collisions. Turn on your hazard lights so other drivers notice your stopped vehicle. 
3. Call the police: If there are any injuries, deaths, or significant property damage, you’re required to report the accident to law enforcement immediately. Even if the crash is just a fender-bender, having an official report on file is valuable for your claim. 
4. Exchange information: Get the other driver’s name, contact details, insurance company, and policy number. Also note their license plate and the make/model of their vehicle. 
5. Document the scene: Take photos of the vehicles, the damage, the surrounding area, skid marks, and any road conditions. Get contact information from any witnesses. 
6. Report to your insurance company: Notify your insurer as soon as possible. Most policies require prompt notification even if you weren’t at fault. 
7. Seek medical attention: Even if you feel fine, some injuries, such as whiplash, don’t show symptoms right away. Getting checked out creates a medical report that will support your claim. 

Throughout the process, don’t admit fault and don’t sign anything from the other driver’s insurance company without understanding what you’re agreeing to. Stick to the facts of the accident when speaking with insurers and law enforcement. 

Texas Underinsured Car Insurance Coverage

Texas requires every driver to carry liability insurance with minimum limits of 30/60/25:  $30,000 per person for bodily injury, $60,000 per accident for bodily injury, and $25,000 for property damage. But those minimums don’t go far. A serious accident with medical bills and vehicle damage can easily exceed the limits. If the at-fault driver only has the state minimum, their policy may not fully cover your losses. 

Underinsured motorist (UIM) coverage kicks in when the at-fault driver’s insurance limits aren’t enough to cover your damages. It pays the gap between what the other driver’s policy covers and your actual costs, up to your own UIM policy limits. 

While UIM coverage isn’t required in Texas, insurance companies must offer it when you buy a policy. You can decline it in writing, but it’s usually worth keeping. 

Texas Car Accident Report Laws

According to Texas car accident laws, not every type of accident must be reported to the police. Call law enforcement if:

• There’s a death
• There’s an injury
• There’s property damage that appears to be over $1,000.

When officers respond, they’ll file an official crash report. Your insurance company will also want a copy, so it’s worth requesting one even if the accident seems minor. The report provides an official record of facts. 

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What Is the Texas Total Loss Threshold?

When a vehicle is damaged badly enough, insurance companies declare it a total loss, meaning it costs more to fix than the car is worth. Under Texas auto accident laws, the threshold for a total loss is 100%. If the cost of repairs plus the salvage value equals or exceeds 100% of the vehicle’s actual cash value (ACV), the car is totaled. 

The ACV is the market value of your vehicle at the time of the accident, or what you could reasonably expect to sell it for. It’s not what you paid for the car or what it would cost to replace it. If your car is totaled, your insurance pays you the ACV, minus your deductible. If you owe more on the car loan than the ACV, you’ll need to pay the remainder of what’s owed. Gap insurance can cover that difference if you have it.  

Texas Insurance Appraisal Law

Sometimes, car owners and insurance companies disagree about how much a vehicle is worth or what it would cost to repair. Formerly, appraisals were allowed but only after a period of failed negotiations. On January 1, 2026, a new Texas car accident law–SB 458–went into effect. Under the new law, all auto insurance providers must include an appraisal clause for all policies. 

How does it work? Either party can request an appraisal. Once the request is made, each side picks a competent, impartial appraiser. Those two appraisers then select a neutral umpire. If the two appraisers can’t agree on a value, the umpire makes the final decision. 

The law comes with several deadlines, including: 

• 1 year to request appraisal
• 20 days from the request to appoint an appraiser
• 120 days for the appraisers to agree
• 240 days to reach a final award amount

How to Use an Insurance Check to Buy a Car

Once your claim is settled, you’ll typically receive a check for the ACV of your totaled vehicle, minus your deductible and any amount owed to your lender. How you use that money depends on whether you own the car outright or still have a loan. 

• If you still owe money: The check will likely be made out to both you and your lender. The lender has a financial interest in the vehicle, so they have to endorse the check before you can cash it. In most cases, the insurance payout goes first to pay off your remaining loan balance, and you keep anything leftover. If the payout is less than what you owe, you’ll need to make up the shortfall. 
• If you own the car outright: The check is yours to use as you see fit. You can put it towards a replacement vehicle, use it as a down payment, or keep it as cash. There’s no legal requirement to use it to buy another car. 

Conclusion

Car crashes are stressful, but navigating Texas car accident laws doesn’t have to be overwhelming. If you get into an accident, take a deep breath, move to the side of the road if you can, and document everything. Report serious accidents to the police, and request an appraisal if you feel like the insurance settlement is too low. 

If your car is a total loss, the next step is finding the right replacement. Tipton Ford can help. We have a huge inventory of new and used cars. Our friendly staff will help you find a vehicle that fits your budget and your needs. Stop by today or give us a call, and we’ll walk you through your options! We’re in Brownsville and serve all of Texas with new and used cars and trucks for sale, including for McAllen, Harlingen, Weslaco, and farther-away cities such as Dallas and Corpus Christi. We can also help you with all your service needs, including transmission service and auto glass repair. 

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FAQs

What is considered a total loss in Texas?

Texas uses a 100% threshold. A vehicle is considered a total loss once it costs more to repair than the vehicle is worth. When a vehicle is totaled, it receives a salvage title and can’t be driven on Texas roads until it’s rebuilt and inspected for safety. 

How is a total loss calculated in Texas?

Texas calculates a total loss by comparing the cost of repairs plus the salvage value to the vehicle’s actual cash value. If the repair + salvage value are equal to or more than the ACV, the vehicle is totaled.  

Can you keep a totaled car in Texas?

Yes, but with conditions. If you keep a totaled vehicle, the insurance payout will be reduced by the car’s salvage value. The vehicle will then receive a salvage title. You cannot legally drive it on public roads until it’s repaired and receives a rebuilt title. 

What will insurance give you for a totaled car?

Your insurer pays the actual cash value of the vehicle at the time of the accident, minus your deductible. The ACV is the fair market value of your car just before the crash– essentially what a buyer would be willing to pay. It accounts for depreciation, mileage, and the condition of your vehicle. 

Do you get sales tax and title with your insurance payout?

Generally no. The insurance payout covers the actual cash value and does not actually include the sales tax, title fees, or registration costs you’ll pay when replacing a car. This is one reason a payout can feel smaller than expected. The check reflects the car’s value, not the cost to replace it. If you’re financing your next vehicle, dealerships will often roll these fees into the loan. 

Can you use the insurance check for anything?

Yes, once your claim is settled and any outstanding loan is paid off, the remaining insurance money is yours to use however you choose. You can put it towards a replacement vehicle, use it as a down payment, or keep it. If you still owe money on the car, the loan balance is paid before you see anything. For most people, the smartest use is putting the payout toward a reliable replacement, but ultimately, the decision is yours.