Texas Auto Insurance Rates Higher For Poor Credit Than DWI

A study in Consumer Reports Magazine showed that drivers with low credit scores had higher Texas auto insurance rates than those arrested for driving while under the influence. The study found that drivers with poor credit paid an average of over $3,400 for their annual Texas auto insurance rates, while those with excellent credit paid less than $1,400. Drivers with outstanding credit and a DWI on their driving record paid just over $2,400 a year, about $1,000 less than the driver with poor credit and a clean driving record.

Texas Auto Insurance Rates Among Nation’s Highest

The study also showed that Texas auto insurance rates were the tenth-highest in the country. A report by the Consumer Federation of America showed that the average American saw an increase of over 45 percent in their annual auto insurance spending from 1988 to 2010 (adjusted for inflation). By contrast, Texas auto insurance spending rose by more than 70 percent over the same period, the highest such increase of any state. Auto insurance spending in California actually decreased by 0.3 percent over the same period.

Poor Credit Leads to Higher Texas Auto Insurance Rates

The Consumer Reports study found that Texas has more drivers with poor credit than nearly every other state. The study revealed that over 60 percent of Texas drivers have a credit score below 700. Only three other states have a higher proportion of drivers with such low credit scores. The high percentage of drivers with poor credit has spurred insurers to raise Texas auto insurance rates. The report also speculates that a lack of regulation regarding Texas auto insurance rates also allows carriers to charge practically any amount they choose.

Why Credit Matters In Calculating Texas Auto Insurance Rates

Auto insurance carriers defend the practice of linking Texas auto insurance rates to credit scores, rather than driving records. The carriers use “data mining” techniques to establish their quotes for Texas auto insurance rates. They enter the data, including credit scores, into an algorithm that determines the customer’s ability to keep up with premium payments, deductible payments and maintenance costs. Only three states – California, Hawaii and Massachusetts – prohibit carriers from using credit scores to calculate insurance rates.

Consumer Attorney Calls Texas Auto Insurance Rates “Perverse”

Norma Garcia, senior attorney for Consumer Reports publisher Consumers Union, called the results of the study on Texas auto insurance rates “perverse.” When presented with the numbers on Texas auto insurance rates for a drunk driver compared to a driver with poor credit, she said, “I don’t know how you defend this.” She also addressed the issue of drivers with poor credit forgoing auto insurance due to the high cost of coverage. “Setting prices too high for the wrong reasons hurts everyone,” she said.

Source: Dallas Morning News

Get Answers For Your Auto Insurance Lawsuit Questions

To find out how we can answer your questions about auto insurance lawsuits, contact one of our attorneys today. Our intake team will take down the details of your case and quickly connect you to an attorney who understands how to get the most from your auto insurance lawsuit. You can also fill out the “Free Case Evaluation” form at the top of this page.