On the Texas Property & Casualty exam, the Personal Automobile Policy shows up both as a standard ISO-style contract and as a set of Texas auto statutes you must apply. This standalone guide reviews the policy's coverage parts, then drills into the Texas overlay: the 30/60/25 financial-responsibility minimums, the at-fault (tort) system, PIP and UM/UIM offer rules, required coverages, and cancellation/nonrenewal notice. The Texas-specific material is where most state credit is earned.

Policy structure (the national base)

The Personal Auto Policy (PAP) is a packaged contract organized into lettered parts:

• Part A — Liability: pays bodily injury (BI) and property damage (PD) the insured is legally liable for; defense is provided and defense costs are paid in addition to the limit.
• Part B — Medical Payments: pays medical/funeral costs for occupants regardless of fault.
• Part C — Uninsured/Underinsured Motorists: pays the insured's injuries when the at-fault party is uninsured or underinsured.
• Part D — Coverage for Damage to Your Auto: Collision and Other Than Collision (Comprehensive), each with a deductible, settled at Actual Cash Value (ACV).
• Part E — Duties After an Accident or Loss and Part F — General Provisions.

Limits may be written as split limits (e.g., 100/300/50) or as a Combined Single Limit (CSL). Insureds include the named insured, resident spouse, resident relatives, and permissive users. Eligible vehicles are private passenger autos, pickups, and vans not used mainly for business. That framework is national; Texas governs the limits and the liability environment.

Texas uses a tort (at-fault) liability system

Texas is an at-fault / tort state: the negligent driver is responsible, and the injured party collects from that driver's liability coverage or through a lawsuit. Texas applies modified comparative fault—the 51% bar rule. A claimant who is 50% or less at fault may recover (reduced by their own percentage), but a claimant who is 51% or more at fault recovers nothing. This is why liability and financial responsibility are the heart of Texas auto regulation.

Financial responsibility: 30/60/25

Every Texas driver must demonstrate financial responsibility, usually by carrying liability insurance at or above the minimum split limits:

• $30,000 bodily injury per person
• $60,000 bodily injury per accident
• $25,000 property damage per accident

Shorthand: "30/60/25." These are statutory minimums; producers typically recommend more. Alternatives such as a deposit or surety bond can satisfy financial responsibility, but liability insurance is the standard method. Operating without coverage brings fines, registration/license consequences, and full personal exposure for damages.

Personal Injury Protection (PIP) and Med Pay

Texas requires insurers to offer PIP, a first-party no-fault coverage:

• PIP pays medical expenses, a portion of lost income, and essential services for the insured and passengers, regardless of fault.
• It must be offered at a minimum of $2,500 and is automatically included unless the insured rejects it in writing.
• Medical Payments (Med Pay) is a separate optional coverage covering medical and funeral expenses only—no wage or services component.

Remember the contrast: PIP is broader (wages + services), Med Pay is medical-only; both pay without regard to fault.

Uninsured/Underinsured Motorist offer rules

UM/UIM covers the insured when the at-fault driver lacks insurance or carries too little.

• It must be offered and is included unless rejected in writing.
• It pays for bodily injury and, in Texas, also includes a property-damage component (usually with a deductible).
• The other driver must be legally at fault.

The pattern mirrors PIP: coverage is built in unless the insured affirmatively waives it in writing.

Cancellation and nonrenewal

Texas controls how an insurer may end a personal auto policy:

• Mid-term cancellation generally requires at least 10 days' written notice.
• Once a policy has been in force 60 days, cancellation is limited to specific reasons—nonpayment of premium, suspension/revocation of a driver's license, or fraud/material misrepresentation.
• Nonrenewal at the end of the term generally requires at least 30 days' advance written notice.

Keep the 10-day cancellation and 30-day nonrenewal timelines distinct—both are commonly tested.

Required vs. optional coverages

Residual market note

Drivers who cannot obtain coverage in the standard market may be insured through the Texas Automobile Insurance Plan Association (TAIPA), the state's assigned-risk plan for auto. It is the auto "insurer of last resort," distinct from TWIA (coastal windstorm) and the Texas FAIR Plan (residential property).

Key Texas numbers to memorize

Common exam traps

• Texas is at-fault, not no-fault, even though PIP is sold here.
• 30/60/25—the $25k is property damage; don't swap it into a BI slot.
• PIP and UM/UIM are included unless rejected in writing.
• PIP = medical + lost wages + services; Med Pay = medical/funeral only.
• 10-day cancellation vs. 30-day nonrenewal.
• After 60 days, cancellation is restricted to a short list of reasons.
• TAIPA is the auto residual market—don't confuse it with TWIA (windstorm) or the FAIR Plan (property).
• Liability defense costs are paid on top of the limit (national rule that still applies in Texas).

Quick recap

• The PAP's Parts A–F structure is national; Texas sets the limits and legal framework.
• Texas is a tort/at-fault state with modified comparative fault (51% bar).
• Minimum liability is 30/60/25.
• PIP ($2,500 min) and UM/UIM must be offered and apply unless rejected in writing.
• Cancellation needs 10 days' notice, nonrenewal needs 30 days', and after 60 days cancellation is limited to nonpayment, license suspension, or fraud.
• TAIPA provides auto coverage of last resort.