Auto insurance rates are rising quickly in Texas and drivers are concerned about it.
While it is normal for car insurance premiums to creep up over the years, Texas drivers have instead seen substantial increases over the past year or two and the increases are expected to continue.
Some major insurance carriers even announced that starting in 2022 and throughout the next few years, drivers could see their premiums increasing by as much as 20% in the state.
What is causing this?
The dramatic rise in automobile insurance premiums is being driven by multiple factors.
Cost of Repairs and Shortage of Materials
One reason why auto insurance rates are on the rise is simply due to the ever-rising cost of repairing vehicles.
Over the past few years, the price of vehicle parts has skyrocketed and labor rates have gone up as well.
Rising parts prices are partly due to materials shortages and partly due to supply shortages, both of which are being attributed to the supply chain issues that have been happening since the start of the COVID-19 pandemic.
The Effect of Covid On Car Insurance Rates – Fewer Drivers
And, speaking of the pandemic, this is yet another reason why automobile insurance rates are climbing today.
When COVID-19 hit and the lock-downs occurred, the number of drivers on the road in Texas decreased substantially.
Since people were simply not supposed to be driving for such a long period of time, many auto insurance companies refunded a portion of all of their customers’ policies to account for less driving time and less risk.
Though this was fair to drivers at the time, it came as a massive financial cost to the insurance companies refunding all that money.
The Effect of Covid On Car Insurance Rates – Fewer Accidents
Also COVID-related was the fact that with fewer people driving overall, there were fewer accidents by number in Texas, which suppressed rising rates for a little while, at least.
Now with everyone back on the road and insurance companies needing to recover financial losses while also battling high prices due to high parts demands, increasing repair labor rates, skyrocketing medical costs, higher car rental costs, and other expenses, insurance companies have had no other option but to increase car insurance premiums.
Auto Insurance Rates Increasing Country-Wide
Texas is far from alone in these rate hikes, though.
While part of the problem with automobile insurance costs does relate to Texas being one of the states with the highest number of accidents every year, all states are seeing increases due to supply chain problems, parts shortages, increasing labor rates, and medical costs across the board.
How Can You Decrease Your Auto Insurance Premiums?
What is a Texas driver to do when facing increasing car insurance rates?
Drive defensively and talk to a helpful automobile insurance agent to learn about things like policy discounts, usage-based insurance, and other affordable options that might help!