Why Is Texas Car Insurance So Expensive?

If you’re a vehicle owner in Texas, you’re probably all too familiar with pricey auto insurance policies. While the Lone Star State isn’t the most expensive in the nation, Texas auto insurance policies are still often higher than average. The El Paso car accident lawyers at the Law Offices of Michael Gopin, PLLC explore the reasons for the high insurance rates here in Texas and what you can do to keep your premiums low.

What Are Average Car Insurance Rates Across the Country?

According to the Insurance Information Institute, the cost of auto insurance premiums has increased nationwide in recent years. One recent study conducted by AAA reported that the average cost of full-coverage car insurance for mid-sized sedans is roughly $1,403 per year. The average cost of insuring a midsize SUV is reportedly $1,296 per year, while the average annual cost of insuring any vehicle is $1,342.

Furthermore, financial services company Bankrate reported car insurance rates in 2022 were $1,771 nationwide for full-coverage auto insurance. For minimum auto insurance coverage, the average nationwide rate is $545 per year. On a state-by-state basis, the most expensive state for auto insurance is New York ($2,996 per year) while the least expensive state is Maine ($876 per year).

In Texas, the annual average cost for full auto insurance coverage is $1,868 per year, more than five percent above the national average. And in certain Texas cities, the average annual costs of full coverage are even higher:

• Houston – $2,146 per year (18 percent higher than the state average)
• Dallas – $2,093 per year (15 percent higher than the state average)
• Laredo – $2,015 per year (11 percent higher than the state average)
• Pasadena – $2,027 per year (11 percent higher than the state average)

What Factors Can Impact Car Insurance Rates?

A number of factors can affect car insurance premiums, including:

• Frequent claims – If you make frequent claims, the insurance company will likely decide that covering you is risky and raise your premiums.
• Fraudulent claims – Similarly, if you have a history of fraudulent claims, it will likely contribute to an increase in your rates.
• Driving record – Drivers who consistently incur traffic tickets or other violations may also see their premiums rise due to added risk to the insurance company.
• Age and sex – Older drivers with longer safe driving records tend to receive better rates. Younger drivers, especially younger males, are more expensive to insure.
• Where you live – If you live in a congested, high-traffic area that is prone to accidents, you are more likely to pay higher insurance premiums.

Impact of Uninsured Drivers on Insurance Rates

One of the less obvious reasons Texas drivers face high insurance premiums is the significant number of uninsured motorists on the road. According to the Insurance Research Council, Texas has one of the highest rates of uninsured drivers in the nation, with estimates ranging between 8% and 14%. When drivers without insurance cause an accident, the costs often fall to the insured driver’s policy, particularly if they carry uninsured/underinsured motorist coverage. As a result, insurance companies must account for this added financial risk when pricing policies, passing those costs on to responsible, insured drivers. This widespread issue directly contributes to the state’s above-average premiums, especially in urban areas where uninsured driving rates tend to be higher. It’s also why insurers often recommend purchasing additional UM/UIM coverage, even if it’s not legally required, to better protect yourself financially in case of a crash with an uninsured driver.

High-Speed Limits and Traffic Congestion

Texas is home to some of the highest speed limits in the country—certain stretches of highway allow drivers to travel up to 85 mph. While this may save commuters time, it also increases the likelihood of severe or fatal accidents, which carry greater liability and medical costs for insurers. In addition, major Texas cities like Houston, Dallas, Austin, and El Paso experience regular traffic congestion, increasing the risk of rear-end collisions, side swipes, and multi-vehicle pileups. Dense traffic conditions also lead to more frequent claims for minor accidents, such as fender benders, which drive up costs even though they result in lower individual payouts. The combination of high-speed driving and gridlock conditions presents a unique risk profile for insurance providers, who must price premiums accordingly to offset their exposure. This dynamic is one of the key reasons urban drivers in Texas pay hundreds more per year than their rural counterparts.

Influence of Natural Disasters on Premiums

Natural disasters are another major factor influencing car insurance rates in Texas. The state regularly experiences hurricanes, flooding, hailstorms, tornadoes, and wildfires—all of which can lead to significant vehicle damage and insurance claims. For example, hailstorms can damage thousands of cars in a single afternoon, triggering mass payouts from insurers. In coastal cities, hurricanes and tropical storms not only destroy homes but also flood vehicles, often resulting in total losses. As the frequency and severity of these events increase, driven in part by changing climate patterns, insurers raise premiums across the board to remain solvent and adequately cover expected losses. Even if you live inland, your rates can still be affected by claims volume across the state, since Texas insurers spread risk across broad policyholder pools. While comprehensive coverage can help protect against these damages, it comes at a higher cost in high-risk zones, particularly for drivers without covered parking or in flood-prone areas.

Tips to Lower Your Car Insurance Premium in Texas

Although many factors that drive up car insurance rates are beyond your control, Texas drivers still have several ways to reduce their premiums. Here are the most effective strategies:

1. Compare Quotes Regularly: Insurance companies vary widely in pricing. By shopping around at least once a year, you could find a better rate for the same coverage.

2. Bundle Policies: Combining your auto insurance with renters’ or homeowners insurance can unlock multi-policy discounts with many providers.

3. Maintain a Clean Driving Record: Avoiding accidents and traffic violations not only keeps you safe—it helps you qualify for lower rates.

4. Increase Your Deductible: Choosing a higher deductible will lower your monthly premium. Just make sure it’s an amount you can afford to pay if needed.

5. Take Advantage of Discounts: Ask your insurer about discounts for defensive driving courses, anti-theft devices, low mileage, or being a good student.

6. Review and Adjust Coverage Yearly: Life changes, such as paying off your vehicle or moving, can impact your insurance needs. Reviewing your policy ensures you’re not overpaying.

The Role of Credit Scores in Insurance Rates

In Texas, your credit score can have a significant effect on your auto insurance premiums. Here’s how it plays a role—and what you can do to improve your rates:

• High credit scores can lead to lower premiums: Insurers often view drivers with excellent credit as financially responsible and less likely to file claims. As a result, these individuals are typically rewarded with better rates.

• Low credit scores are seen as higher risk: Even if you have no accidents or violations, a poor credit score may increase your premium. Insurance companies associate low scores with a higher chance of future claims.

• Improving your credit can reduce your insurance costs over time: Making on-time payments, reducing debt, and reviewing your credit report for errors are all steps that can help raise your score—and eventually lower your premiums.

• Texas law prohibits credit from being the sole reason for denial: While insurers in Texas are allowed to factor in credit when setting rates, they cannot use it alone to deny you coverage.

• Request a re-evaluation if your credit improves: If you’ve taken steps to improve your credit score, reach out to your insurance provider and ask them to reassess your rate. You might be eligible for a lower premium based on your updated credit profile.

Injured in an Accident? Michael Gopin Can Help

If you have been injured in an accident that wasn’t your fault, don’t hesitate to seek legal help to pursue the compensation you deserve. At The Law Offices of Michael Gopin, PLLC, our El Paso car crash accident attorneys can answer your questions and evaluate your case for free during an initial consultation. Contact us today to learn more.

Michael J. Gopin

Michael J. Gopin has practiced law in El Paso since 1987. Even after more than 30 years, he still remembers his first jury case. It was two weeks after receiving his license, when he represented a person whose life had been forever changed after being blinded in a work-related incident...