If you think Texas car insurance rates are on the rise, it’s not your imagination. Based on a report released earlier this year by the National Association of Insurance Commissioners, Texas premiums now rank 11th highest in the nation. Two years ago, we were ranked 14th highest in the nation. The average Texas car insurance premium, based on the 2009 data used for the NAIC report (the most recent nationwide data available), is now $1,022 a year. The national annual average rate is $901.
Louisiana was ranked first in the country with an average annual rate of $1,270. Rounding out the rest of the top ten were New Jersey ($1,218), New York ($1,185), Rhode Island ($1,118), Delaware ($1,106), Florida ($1,088), Nevada ($1,073), Alaska ($1,073), Connecticut ($1,050), and Michigan ($1,043).
There are three contributing factors leading to the long, slow increase in Texas car insurance rates including increased repair costs, population growth, and the high number of uninsured motorists.
Repair Costs: The biggest factor contributing to higher repair costs appear to be the rising cost of parts. The costs of car parts has increased at a faster rate than the labor cost to repair the vehicles damaged in a wreck. Texas also has a higher percentage of people driving pickup trucks and large SUVs which tend to cause more damage in a wreck than cars. I expect repair costs to continue to rise as automakers continue to incorporate lighter weight materials to help meet US fuel economy standards as outlined in the Corporate Average Fuel Economy (CAFÉ) goals for 2025.
Population Growth: Texas has experienced incredible growth in our population. Since April 1, 2010, Texas population has grown by more than 1.3 million people. The fastest growing areas include Houston, Dallas / Fort Worth, San Antonio, and Austin. More people mean more cars on our already crowded streets and highways which translates into more opportunities to bump into new neighbors.
Texas population in the last official census from 2010 had a population of over 25 million residents. Projections through 2050 from the Office of the State Demographer show a projected total population ranging from over 41 million (based on half the growth rate we experienced from 2000 to 2010) to just over 55 million (based on the same growth rate experienced from 2000 to 2010). If either of these numbers are close to the actual growth rate we experience, then car insurance rates will continue to increase.
Uninsured Motorists: The number of Texas drivers without car insurance continues to drop. The last published figures were from 2012 and they indicated about 13% or 2.6 million drivers in Texas were driving without insurance, down from 21.6% or 4.2 million drivers on 2011. Dallas County was reported to have the highest percentage of uninsured drivers at 14.8%. I believe this number will continue to drop slowly over time as the law mandating car insurance is enforced, which should help offset some of the increases due to rising repair costs and population growth.
There are several ways Texas drivers can save on car insurance as opposed to simply waiting for the inevitable rate increase.
Compare Rates: On average, I recommend drivers compare rates every one to two years. It’s amazing what can happen to a rate if someone doesn’t compare for 5 years or more.
Combine Cars: If there is more than one driver in the home, compare rates with both cars on the same policy. More often than not, this makes sense due to the multi-vehicle discount.
Combine Policies: If you have renters or home insurance, compare the combined premium rate of the home and car with the same company versus two different companies. Sometimes it makes more economic sense to combine, but not always.
Defensive Driving: If it’s been a while since you last took defensive driving, consider taking it again. It may be worth it to spend the time in one of the online or in person classes.
Raise Collision Deductible: Every car policy can be written with a collision and a comprehensive deductible. The one that carries the most weight is the collision deductible. Higher deductibles mean lower rates.
Credit Score: Credit is one of the factors used to determine a person’s premium. The higher the credit score, the lower the premium. Improve your credit and you’ll pay less for all your insurance in Texas.
For 8 more ways to save on car insurance, check out our earlier blog post, 8 Car Insurance Discounts to Know About at http://22.214.171.124/~wiseinsu/8-car-insurance-discounts-to-know-about/.
What do you think? Share your thoughts, questions, and experiences with me in the comments section of our blog or on our Facebook and Google + pages. I’d love to hear from you!