Why Is Car Insurance So Expensive In Texas?
Car insurance rates in Texas have been steadily rising in recent years, with data indicating that this upward trend is likely to continue. In December 2023, the average cost for a full-coverage policy was $2,295 per year. By June 2024, that number had increased to $2,652 annually.
While car insurance rates are rising across the country, it’s important to understand the specific factors driving up costs in Texas. With over 20 years of experience in the insurance industry, I can provide some helpful insights into why car insurance is becoming more expensive in the state.
Key Takeaways
The Texas Department of Insurance reports that car insurance rates rose by more than 25% in 2023. Over the period from January 2021 to June 2024, rates increased by 40%.
Several factors contribute to the high cost of car insurance in Texas, including a growing population, heavy traffic, high vehicle repair cost, and a higher rate of fatal accidents.
One effective way to lower your car insurance costs is by comparing quotes from various insurance companies.
Why Is Car Insurance So Expensive In Texas?
There isn’t one main reason why car insurance is high in Texas, but several factors play a role. These include a growing population, a lot of uninsured drivers, fast speed limits, expensive car repairs, and extreme weather.
Other factors that can affect your rates include your age, where you live, your credit score, and the type of coverage you have.
Unique Reasons Why Car Insurance In Texas Is So High
The cost of Texas car insurance can be attributed to the following reasons as noted below.
Increasing Population
Texas is the second most populated state in the U.S., with over 30 million residents. The state has many cities with dense populations. More people means more drivers and heavier traffic, which leads to a higher chance of accidents.
Urban areas also have more incidents of car theft and vandalism. These higher risks result in more car insurance claims, prompting insurers to raise their rates.
Uninsured Drivers
In Texas, about 14.1% of drivers do not carry any car insurance. This is a significant percentage compared to the national average, which means a relatively high number of drivers on the road are not financially protected in case of an accident.
When an uninsured driver is involved in a crash, the insured driver may have difficulty recovering costs for damages or injuries, especially if the uninsured driver cannot pay for the damages out of pocket.
To make up for the increased financial risk posed by these uninsured drivers, insurance companies often raise their premiums across the board.
High Repair Costs
High repair costs in Texas have a significant impact on car insurance rates. As the cost of parts and labor continues to rise, the expense to repair vehicles after accidents has increased dramatically. Modern cars are equipped with advanced technology and safety features, which, while beneficial, often make repairs more expensive.
Additionally, shortages of parts and supply chain issues can further drive up the cost of repairs. Insurance companies must account for these rising repair costs when determining premiums, leading to higher rates for drivers.
High Speed Limits
Texas is known for its high-speed highways, with some roads having speed limits as high as 85 miles per hour, the fastest in the U.S. Higher speed limits increase the likelihood of accidents and make crashes more severe. This higher risk leads to higher car insurance premiums in Texas.
Severe Weather
Texas is prone to severe weather, including hurricanes, floods, fires, and storms. These events can cause vehicle damage and car accidents, increasing the number of claims. As a result, car insurance providers in Texas raise their premiums to cover the higher risks.
High Minimum Coverage Requirement
Texas requires higher minimum coverage levels than many other states. For example, the state mandates $30,000 per person and $60,000 per accident for bodily injury liability, which is higher than the typical $25,000 and $50,000 minimums in other states. These higher coverage limits contribute to higher insurance rates in Texas.
Factors Causing Your Car Insurance To Be So High
There are many factors that can influence how much you pay for car insurance. Here are some of the main ones that can affect your premium.
Car’s Make And Model
The make and model of your vehicle can have a big impact on your car insurance rates. Luxury cars or vehicles with higher value cost more to insure because repairs or replacement can be more expensive.
Sports cars, in particular, are seen as high-risk due to their tendency to be involved in accidents. On the other hand, older cars are typically cheaper to insure because their value has decreased over time, reducing the cost to repair or replace them.
Age
Your age affects how much you pay for car insurance. Teenagers, especially those aged 16 to 19, tend to have the highest rates because they are considered high-risk drivers due to their inexperience. This trend continues until drivers reach their 70s, when premiums may increase slightly for senior drivers.
Location
Where you live in Texas can greatly affect your insurance premiums. Factors like population density, car repair costs, risk of severe weather, medical expenses, and car theft rates all play a part in setting insurance prices. For example, cities like Houston, Dallas, and Austin tend to have the highest insurance rates in Texas due to these factors.
Credit Score
In Texas, your credit score can influence your car insurance rates. Drivers with good credit typically pay lower premiums since they are seen as less likely to file claims. A person with excellent credit may pay around $200 less annually than someone with a good credit score. On the other hand, drivers with poor credit scores could see their premiums increase by up to $1,000.
Driving Record
Your driving history is another major factor in determining your insurance rate. If you have a clean driving record, you’re likely to pay lower premiums because you’re considered less of a risk. However, if you’ve had accidents, speeding tickets, or other violations, you will be seen as a higher risk, and your premiums will likely be higher.
Claims History
If you’ve filed multiple insurance claims in the past, it could make your premiums go up. Insurers see a history of claims as an indication that you’re more likely to file again in the future, so they adjust your rates accordingly.
How To Get Cheaper Car Insurance In Texas
In Texas, there are different ways to lower your car insurance costs by using discounts that are available. Below are some common discounts you might be able to get:
Active-duty military or veteran discount
You can expect a 15%–25% discount. This discount applies to current members of the military, including active-duty soldiers, National Guard members, and Reserves, as well as veterans who have served in the armed forces.
Safe driver discount
You can expect a 22% discount. Drivers who have a clean driving record, meaning no recent accidents or traffic violations, are often rewarded with a discount. This shows that the driver is less likely to cause a future accident, making them a lower risk to insure.
If you’ve been accident-free and don’t have any moving violations, you could qualify for this discount.
Good student discount
You can expect a 10%–15% discount. Full-time students, whether in high school or college, who maintain a strong academic record (typically a B average or higher), can receive an insurance discount. This is based on the belief that students who perform well academically are more responsible and careful drivers.
Defensive driving discount
You can expect a 5% discount. If you complete a defensive driving course, which teaches advanced driving techniques and how to avoid potential hazards, you could be eligible for a discount. Insurance providers view drivers who have taken these courses as less likely to be involved in accidents, thus reducing the risk.
Homeowner discount
Some insurance companies offer discounts to drivers who also own a home. Homeowners are seen as more stable and responsible, which lowers the risk for insurers. This discount can vary depending on the insurer, but owning a home generally shows financial stability, which may make you less likely to file claims.
FAQs
What should I do if my car insurance is too high?
If your car insurance is too expensive, you can try several things to lower it. First, compare quotes from different insurance companies to see if you can find a better rate.
You can also check for discounts you might qualify for, like safe driver discount, good student discount, or low mileage discounts. Also, consider adjusting your coverage if you have an older car or if you don’t need as much protection.
Why did my car insurance rate go up?
It could be due to an increase in the number of accidents or claims in your area, or because your insurer raised their rates for everyone. If you’ve had an accident, a traffic violation, or if your credit score changed, that could also cause your rates to go up.
Another reason might be that the value of your car has gone up, or if you added extra coverage. It’s a good idea to contact your insurance company to ask why your rate increased.
