Auto Insurance Rate Increases in Texas

In the last five years Texas has experienced above average rate increases for its auto insurance. In this article we give an overview of car insurance rate hikes in Texas as well as explain what Texans can do to save money.

In the last five years, auto insurance rates in Texas have risen at a higher than average rate. The average rate hike was about 4.5% per year, though some companies increased by as much as 8 to 9% per year. In this article we give an overview of car insurance rate hikes in Texas, as well as explain what Texans can do to save money.

Car Insurance Rate Increases in Texas

Within Texas, the 12 largest car insurance companies have raised rates on average 27% cumulatively since 2012. It is slightly higher than the national average increase of 25%, though is far off from the 54% increase we saw in Georgia. Not every company raised their rates in Texas, however. Home State Insurance was the rare exception that did not submit rate increases, while Travelers raised them by only 8.4% over the five years in total. In the table below you can see how every company has raised rates on a yearly basis:

Company201220132014201520162017
Allstate2%3%3%6%7%0%
American Family 3%11%4%1%19%0%
Farmers12%4%8%10%12%0%
GEICO1%10%3%6%3%0%
Home State Insurance0%0%0%0%0%0%
Liberty Mutual8%4%3%7%14%11%
Nationwide 3%4%9%9%13%11%
Progressive12%-3%3%4%7%2%
State Farm 0%5%1%3%10%0%
Texas Farm Bureau Mutual 2%2%4%4%10%0%
Travelers 3%1%3%1%0%0%
United Services Automobile Association1%1%0%6%8%0%

Certain companies like Progressive opted for smaller, incremental increases year over year, while others such as American Family opted for larger, one-off increases. To see how each company raised rates cumulatively since 2012, look at the graph below:

Image shows cumulative car insurance rate hikes in Texas by company since 2012

Rate Increases in Texas vs. Other States

Neighboring Louisiana also experienced above average cumulative rate increases compared to the rest of the country. Damaging storms and floods are the most likely reason for the south receiving higher increases than other parts of the country with more inert weather.

Map shows how auto rates have increased in states

In terms of the average rate increase per year, Texas was in line with the national average every year until 2015 where it raised rates 1 percentage point above the national average. 2016 was particularly bad for Texas car insurance policyholders, as rate hikes were a couple percentage points higher than the national average. We speculate that costly hail storms in the state over the last few years led to the extraordinarily high increase.

YearTexas Increase Per YearNational Increase Per YearDifference From National Increase
20124%4%0%
20133%3%0%
20143%3%0%
20155%4%1%
20168%6%2%
2017*1%3%-2%
*Until May 2017

What Can Texans Do if Their Car Insurance Rates Are Raised?

If you find your rates are now unaffordable, as we previously found was the case for over a quarter of Houstonians, there are a few crucial things you need to consider.

Switching Insurers

The first is assessing whether you find better rates in Texas. According to Nielsen survey data, about 5.3 million Texans with auto policies have not shopped for new insurance in over five years, and only 1.6 million switched carriers because of better pricing in 2016--Texas has over 10 million auto policies in force. If a Nationwide customer consistently saw the average hikes that we calculated above, and did not switch, their rates could be roughly 60% more expensive than they were five years ago.

It is incredibly important to shop around for a new policy at least every three years, although every year would be even better. For drivers with auto policies in Dallas and San Antonio, rates can range by several thousand dollars between certain insurers for the same profile. If you stay with the same company year after year, there is no way to know if your rates are going up faster than other companies unless you have access to that data by comparing quotes.

Adjusting Your Limits

If you are content with your auto insurer, you can reduce your rates by re-evaluating your coverage limits. For example, If you own a car that is more than 10 years old and/or worth less than $3,000, you do not need to have comprehensive or collision insurance. The value of the vehicle will be worth less than what you pay for those coverages over five years. That could end up saving nearly 50% of what you normally pay yearly.

You can save money by also making sure your liability limits reflect the total amount of assets you carry. For example, if you carry $200,000 in assets between your home, car and bank accounts, you do not need liability over that amount. You just need enough to protect the total amount you can be sued for. Alternatively, if your bank statements and assets have decreased, your liability limits can likewise be dropped to match.

Ideally you should buy as much liability insurance you can afford, but if you are currently struggling to afford your policy, adjusting your limits to reflect your assets can end up saving you some more money. Be aware though, you should also account for any future salary you may make. If you know you are due for a big pay raise in the future, adjust for what your assets may be when that pay raise comes.

Applying for Car Insurance Discounts

Lastly, another great way to chip away at your car insurance is to apply for discounts. In Texas, you can take a defensive driving course which can end up saving you 10% on certain coverages. If you have a child on your policy, and they get good grades, you can end up saving another 10% for a good student discount. You can see a larger list of discounts most auto insurers offer here and a comparison of how Texas ranks among other states for cheap car insurance here.

Sources
Nielsen iClout data
Ratefilings.com

Mark Fitzpatrick

Mark is a Senior Research Analyst for ValuePenguin focusing primarily on the insurance industry, primarily auto insurance. He previously worked in financial risk management at State Street Corporation.

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