I’ve worked with several people over the past few days quoting their car insurance. Ultimately we’re hoping to provide equal or better coverage for them for less money than they’re currently paying. I’ve been able to save several of them anywhere from $100 to $1,000 a year. There were two we couldn’t help. For them, it would have cost them more to have me write their car insurance than to stay with their current insurance company. I told them to stay with their current insurance company. The reason was ticket activity.
Texas insurance rates have increased for many, not all, of the companies over the past six months. The reason for much of the increase has been placed squarely on the two major storms that blew through the Dallas / Fort Worth area last year; the tornados in April and the hail storm in June. Those increases profoundly impacted home rates in north Texas, but they also are showing up on some of the car insurance rates. They show up in two different ways;
- The base premium rate, what the premium would look like if there are no claims and no violations (tickets).
- They also show up in the amount the rate changes when the MVR report returns tickets or moving violations for any driver in the household.
What has completely surprised me is the amount of change in premium for a speeding ticket. One of the people I wasn’t able to help had a daughter with a speeding ticket. It was driving less than 10 miles over the speed limit. The impact on the annual premium was $1,000. That increase alone caused my best quote to be uncompetitive, however, the impact is even greater when you consider how long a ticket like that will impact their premium.
- Texas law allows insurance companies to surcharge an insured for 3 years from the date of the violation.
- In this case, the ticket resulted in the policy being surcharged at the rate of $1,000 a year for the next two years since the ticket was already 1 year old.
- Many companies also tier for up to an additional 2 years, years 4 and 5.
- Placing someone in a different tier means they are placed in a better (preferred) or worse (not so preferred) pricing bracket.
- The impact for this one ticket is between $2,000 and $4,000 a year if we had written their insurance.
The cost can go much higher if the violation had been for a worse infraction such as:
- Speeding 10 to 20 miles or more above the posted speed limit
- Passing a school bus when it’s lights are flashing and discharging children
- Driving recklessly
- Evading police
- Racing
In these cases, the combination of the surcharge and being placed in a less acceptable tier can easily exceed $1,000 a year. Add that up over 5 years and someone could pay an extra $5,000 to $7,500 for car insurance.
Not everyone is charging this amount for a single ticket, but more companies are increasing the amount they do surcharge. Avoiding a ticket is not always possible however we can:
- Slow down and leave earlier for that appointment.
- Pay more attention to speed zone changes.
- Take advantage of defensive driving when that option is available.
The savings will potentially be more than financial too!
What’s the craziest rate increase on car insurance you’ve seen lately? Share it with us on our Facebook page or in the comments section of our blog. We’d also be happy to review your car insurance to see if we can save you money. If not, we’ll thank you and tell you to stay with your current company.
