Understanding Rates
Texas law requires insurance rates to be reasonable, adequate, not discriminatory, and not excessive to the risks for which they apply. Auto insurance companies in Texas set their own rates and file them with TDI for review. Companies do not have to receive prior approval before using their rates. However, TDI can order a company to make refunds if it determines that a company’s filed rates are excessive.
Factors that Affect Your Premium
Companies use a process called underwriting to decide whether to sell you a policy and what rate to charge you. Companies must file their underwriting guidelines with TDI and update them each time they make a change. The criteria companies typically use to establish premiums include:
- Your age and, for younger drivers, your marital status. Male drivers under 25 and unmarried women under 21 have the highest rates. Drivers over 50 may get discounts.
- Your driving record and claims history. A good driving record can save you money. If you have accidents or tickets on your driving record, you’ll have to pay more for insurance. Companies may add surcharges to your premium for major convictions, some driving violations, and accidents that result in property damage. Some surcharges are mandatory and will apply to your premium for three years.
- Where you keep your car. Because drivers in urban areas have more accidents and auto thefts, their rates are typically higher than the rates for drivers in rural areas.
- The type of car you drive. Collision and comprehensive rates are highest for luxury, high-performance, and sports cars. Rates may also be higher for cars that damage easily or cost more to repair.
- Your car’s primary use. Rates for cars driven solely for pleasure are lower than rates for cars driven to and from work or used for business.
- Your credit score. Companies may consider your credit score when deciding whether to sell you a policy and at what cost. A company cannot refuse to sell you a policy or cancel or nonrenew your policy solely based on your credit. Visit the Learning Center on TDI’s HelpInsure.com website to find out which companies use credit scores and how they use them.
- Whether you drove uninsured in Texas. Companies may charge more if you drove uninsured in Texas for more than 30 days in the 12 months before you applied for insurance. If you didn’t, a company cannot charge you more for liability coverage because of your prior lack of coverage.