Some reasons why car insurance has gone up in Texas

See Texas car insurance premiums are soaring. Here's what's behind the spike — and what you can do by Madison Iszler. Excerpts:

"In Texas, rates climbed an average 25.5% in 2023, according to the Texas Department of Insurance, the biggest annual increase in at least a decade —  more than double average increases nationwide.

Data on average premiums paid by Texas drivers in 2023 was not yet available, the department said. But financial services company Bankrate.com estimated the average annual premium in Texas is $2,620 this year, up from $2,019 in 2023 and $1,868 in 2022. Bankrate put the average annual premium at $2,576 in the San Antonio area and $2,543 nationwide.

Across the U.S., rates jumped 11.2% in 2023 and are expected to surge another 12.6% this year, according to personal finance website ValuePenguin. It predicts a rate increase of at least 5% in every state this year except Colorado, Hawaii, Idaho and North Carolina.

Prices of new and used vehicles have spiked since the pandemic so insurers are having to write checks for larger amounts to replace totaled vehicles, said Stephen Crewdson, senior director of insurance business intelligence at consumer research company J.D. Power.

The costs of labor and parts are rising, too, because of supply chain problems, inflation and more technology being built into cars. Some parts are taking longer than usual to arrive at dealerships and auto shops, which also means insurers are spending more to keep customers in rental cars than they typically would, Crewdson said.

The volume of accidents — and severe collisions — is also increasing, pushing up medical costs. There were 15,299 serious injury crashes in Texas in 2022, up 18.5% from 2019, according to the most recent data available from the Texas Department of Transportation. The number of vehicle traffic fatalities increased 23.6%.

That confluence of factors has caused whiplash among insurers who saw customers staying off the roads during the pandemic and in some cases reduced premiums or even returned portions of them.

“Premiums are still going up rapidly because insurers are trying to play catch-up with what happened during that period,” Crewdson said. “There are emerging data points suggesting that some have caught up with the cost … but there are certainly cases of insurers that have not yet caught up. And they’re going to continue to need to increase premiums until they do.”"