The Lone Star State is renowned for its gorgeous landscapes and larger-than-life attitude. Unfortunately, Texas is also becoming known for another thing among its resident motorists: the soaring cost of insurance. With the economy in a shaky state and many Texans already struggling financially, a major hike in insurance premiums is the last thing anyone needs. But what’s causing this rate surge, and is there anything Texans can do about it? We’ll dig into this trend and reveal what’s happening and why.
Everything’s Bigger in Texas (Including Insurance Premiums)
In July of last year, Texas residents were told they could soon expect their insurance rates to go up across the board — and they have. Requests for rate hikes saw a major spike in the fourth quarter of 2002, and more may be coming. Here’s how the problems are breaking down:
Home Insurance
Over the past two years, Texans have seen a sharp rise in their homeowners insurance premiums. Why? The reasons are varied, but the biggest culprit — and one wreaking havoc nationwide — is extreme weather. Texas is experiencing more and more extreme weather events, including hurricanes, which cost insurance companies millions or even billions in payouts.
The situation has gotten bad enough that some insurance companies have pulled out of Texas to avoid insolvency, leaving residents with poorer options, such as state-chartered insurance programs. These programs often have more limited coverage than private insurance and have higher premiums.
Auto Insurance
Car insurance has also seen a spike in rates, putting Texans under financial strain. Per numbers from Ross Martin at The Zebra, Texans pay around $993 for a six-month policy. That’s 13% above the national average. Why is it so difficult to find cheap Texas car insurance? A few reasons:
Inflation: This is affecting the cost of living everywhere, not just in Texas.
Repairs: The cost of repairs which have become more expensive due to supply chain disruptions, increased sophistication of replacement parts, and other factors.
Uninsured Drivers: This is an ongoing problem in Texas. These folks cause bigger payouts for insurance companies, which leads to higher premiums for everyone.
Catalytic Converter Theft: The theft of catalytic converters is a nationwide issue that has surged in recent years. These thefts lead to more claims and (you guessed it) larger premiums for comprehensive coverage.
Health Insurance
Affordable health care has been an issue in the United States for decades, if not longer. Texas, unfortunately, has the highest rate of uninsured individuals in the country and double the national average of uninsured children. Many Texans find it difficult or impossible to find affordable health care — and struggle with finding or affording health insurance.
People without health insurance may avoid going to the doctor out of fear of crippling medical debt, which could lead to a more widespread health crisis. While there are no perfect solutions to Texas’ healthcare problems, there are some alternatives worth exploring:
First, the Affordable Care Act (ACA) may provide subsidized health care for qualifying Texans, enough to make ends meet. Community health centers, though often not as well-equipped or staffed as private healthcare providers, are also a common alternative, providing low-cost or free healthcare to those in financial need. Further, advocacy groups in Texas are pushing to expand Medicaid to bring affordable health coverage to more residents.
How Texans Can Lower Insurance Costs
While exploring alternatives to standard healthcare coverage is a step in the right direction, it won’t be enough for everyone. In the meantime, there are some other steps Texans can take to deal with the rising cost of insurance:
One of the easiest and most straightforward ways to find a lower insurance rate is to do comparison shopping. Use online tools to compare quotes from various insurance companies, and you could find the same (or even better) coverage for less money.
You can also bring down your insurance rates by reviewing your policy and making some changes — for example, you could lower your monthly payments by increasing your deductible. You’ll end up paying more out of pocket in case of a claim, but you’ll be able to put some extra cash away in the meantime.
You can also bundle your home and auto insurance together if you’re a homeowner or even if you’re a renter. Renters insurance is not something many tenants think of, but it can be a godsend in the event of disaster or burglary.
Speaking of renting, choosing to rent a house instead of owning a home might be another option to consider. Rent is often cheaper than your average mortgage payment, and renters insurance is generally much less than your average homeowners’ insurance payment.
Things aren’t easy for American consumers right now, and the insurance situation in Texas is not at its best. But with some perseverance and homework, you can take steps to beat those rising premiums.
