Everything’s bigger in Texas — at least that’s what they say. And if you live there, you’ll probably agree with that statement, especially when it comes to your auto insurance costs. Surpassing the national average cost for a monthly premium by a few dollars might not sound bad, but compared with North Carolina (one of the cheapest states for car insurance), Texas is paying an average $70 more per month. Don’t be discouraged, though. When shopping for coverage in the Lone Star State, we found $240 in available savings.
Here is a comparison of yearly premiums for the minimum coverage required in Texas. Texas Farm Bureau was the cheapest quote at $926 annually; Progressive was close behind at $936. State Farm and Geico topped the chart, both over $1,000.
But auto insurance premiums are based on a wide variety of information that is different for everybody. Each company calculates the same information in different ways. One company may consider your age to be a major factor, while another may deem your employment status to be more important in calculating your quote. This is why you should make an effort to check as many insurers as possible. With every new quote comes the possibility of hundreds of dollars in savings.
All of the quotes were completed using each company’s personal online quote tool.
Our Top 4 Picks for the Best Cheap Car Insurance in Texas
Compare Affordable Car Insurance Rates in Texas
The top four companies all had high customer service rankings from J.D. Power. They were cross-referenced with the financial stability reports released by A.M. Best. By these standards, all the companies were reliable and financially solvent.
Texas Farm Bureau was the cheapest rate at $926. Progressive fell in the mid-$900s range, as well. Then the quotes took a sharp jump, with State Farm and Geico being over $1,000. J.D. Power’s customer service rankings did rank Texas Farm Bureau as the best by a slight margin, but otherwise, there was no real explanation for the price difference between it and the other top companies.
Instead of paying more for minimum coverage or better service, think about upgrading to more protection. It could end up saving you money.
Texas’ Minimum Coverage Requirements for 2020
In Texas, it’s illegal to drive a car without proof of insurance or financial responsibility. Texas drivers are required to provide proof of liability insurance when they register their vehicles. The minimum coverages must meet $30,000 for bodily injury or death of one individual; $60,000 for bodily injury or death to two or more people; and $25,000 for property damage liability. This is otherwise known as a 30/60/25 plan.
You can also invest in a surety bond with the Texas Department of Insurance, which will guarantee your right to drive the roads of Texas. You’ll essentially be putting up your property as collateral if you can’t pay the damages caused in an accident. Secondly, you might make a deposit of cash or securities worth $55,000 with the county comptroller or judge. In the event of an accident, these assets will be liquidated to pay any damages you have caused. Lastly, you can become self-insured. To become self-insured, you must own at least 25 registered vehicles. Should you be found responsible in an accident, you will be required to pay the same damages that any traditional insurance company would.
If you think that minimum coverage is all you’ll need, take the following facts into consideration:
- An automobile accident will occur to the average individual approximately once every 17.9 years.
- The average cost of a disabling, nonfatal accident is $93,800.
- If you decided to buy a cheap car insurance policy with only the coverage mandated by the Texas government (30/60/25), you could personally be on the hook for over $50,000 after the bodily injury protection is depleted. You could owe even more if your property protection (only $25,000) is exceeded.
If, instead, you decided to upgrade your coverage to a more appropriate amount (50/100/50), you would certainly have a much better chance at covering all or most of the bills generated by an automobile accident. You may think that an increase in coverage would jack up your premiums to an unreasonable amount, but this is not necessarily the case. If you chose to upgrade your coverage with Texas Farm Bureau, you would spend only $22 more per year. If you calculate those numbers out for 18 years, that’s only $396 more. If that is all it took to increase your protection and be better prepared for the future, it is worth considering.
The fine for driving without car insurance in Texas is $350 plus court costs and possibly additional fees. Repeat offenders face fines up to $1,000 and a two-year suspension of your driver’s license.
Texas average minimum coverage car insurance cost per carrier
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Texas average full coverage car insurance cost per carrier
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Our Car Insurance Rates
We used insurance rates from Quadrant Information Services. This includes analyzing thousands of rates from all 50 states that were publicly sourced from 2019 insurer filings. Rates are based on a 30-year-old male or female that had a clean driving record. Full Coverage premiums assumed a $500 collision and comprehensive deductible, and we looked at those who had both good and poor credit. These rates should be used to inform your car insurance shopping process, but your own quote may differ.
Compare Affordable Car Insurance Rates in Texas
Why are Texas’ rates so expensive?
Generally speaking, more rural states have lower average insurance premiums. You might think Texas would be a leader of cheap rates. Back in 2012, Jerry Johns, then president of the Southwestern Insurance Information Service, said, “Texas is a fast-growing state, and in cities like Dallas, Houston and San Antonio, the population density is contributing to more accidents, particularly where texting, speed or alcohol are involved.”
Johns was quite correct. Three of the 10 largest cities in the country are in Texas, more than any other state. The Texas Tribune noted that between 2010 and 2014 the city of Austin had the largest population increase of any city in the United States, growing by 15.5 percent — from 790,390 residents to 912,791. Fort Worth and San Antonio also made the list, both increasing by almost 10 percent.
The Lone Star State’s size and growth have led to an influx of more vehicles, which means more opportunities for accidents. Insurers are keen to the trend. With the population showing no signs of waning, drivers may not see decreases in the average rate for quite a while. This might entice those searching for a better rate to shop around and explore discounts on offers from various insurers.
What if I’m not a full-time resident?
According to the American Automobile Association, non-residents of Texas operating a privately owned vehicle may not spend more than 25 days in Texas during a single calendar month without registering their car in the state. Leniency for military personnel and out-of-state college students is granted.
What is no-fault insurance?
No-fault insurance mandates that each insurance company pay for the personal injury of its customers, rather than sending the bill to the company of the driver at fault. Texas is not a no-fault state, so this kind of insurance is not available or required here.
What is an SR-22 declaration?
SR-22 declarations are given to high-risk drivers to prove that they have received high-risk insurance after a license suspension. Most states require this declaration as proof of insurance before returning your suspended license.
Even If You’re Happy, It’s Best to Shop for a New Policy Every Couple of Years
In a study produced by Earnix, 68 percent of all insurance companies polled made strategic pricing changes within a year in order to produce greater profitability. In order to maximize profits, insurance companies have begun using a tool that analyzes information outside of the traditional risk profile. Complex algorithms analyze your personal data, such as shopping habits and social media interactions, to determine how likely you are to shop for better prices. The process is called “price optimization.” If you are found to be undeterred by price changes or don’t seem to be concerned with finding your best deal, insurance companies will start pushing the boundaries of your premium to see how much you’re really willing to pay.
Shopping and gathering quotes from multiple providers will produce a win-win scenario. First, you might find grand savings, the likes of which you couldn’t have imagined! Especially if it has been a while since you’ve shopped around. Second, even if you find that the policy you currently hold is still your best deal, you’ll be showing the insurance companies that you aren’t afraid of leaving for a better price. This could save you from incremental price hikes with the purpose of simply stretching your wallet as far as it will open.
Recently, 15 states have begun to address the use of price optimization within their borders. Some states like California have said that the practice is illegal since it uses information outside of risk-related data. Others, like Vermont, call it a discriminatory practice that disqualifies it for use as a price influencer. Still others, like New York, have only begun to investigate the practice. Unfortunately, Texas has yet to take a stand against price optimization. This means your protection from unfair price changes is squarely in your hands. Keep an eye out for savings everywhere you can, and remember the more quotes you get, the better off you’ll be in the long run.
Three demographic groups, in particular, can benefit from regularly calling to get lower rates. Good drivers are valuable to insurance companies. Many of them will give loyal customers some great enticements to move from one company to the next. Those with bad credit can find a rate drop for every 50 to 100 points that they can increase their credit score. Young drivers age out of risk pools on certain birthdays. If those dates fall between policy renewals, you may have to wait months for a lower rate unless you renegotiate your contract. You can also find good student discounts.
To be best protected in Texas, you’ll need to investigate as many companies as possible. There’s no other way to find the best car insurance policy out there. Fortunately for you, it’s not a difficult task and takes no more than an hour, tops. What do you have to lose? Compare Affordable Car Insurance Rates in Texas
Compare Affordable Car Insurance Rates in Texas