Texas Car Insurance: Factors that Affect Car Insurance Rates

If you are a driver in Texas (or anywhere for that matter), you know how complicated and confusing it can be to file a car accident claim, switch car insurance companies or simply add a person on to your policy. To help make things easier when dealing with your auto insurance company, we have listed some helpful tips for Texas car insurance customers below. Understanding these items can not only save you a lot of time and money on your auto insurance, but it will also help you be better prepared in the event of a car accident.

1. How your Texas car insurance company determines your car's value after it has been declared a "total loss"
When totaling your car, your insurance company's goal is to help you find a new car within the same market. To do this, car insurance companies use three different methods for determining the value of the car declared a total loss, such as:

• Computerized vendor quotes
• Market research
• Online resources, such as Kelley Blue Book and Edmunds.com

If the car insurance company is unable to find a car from within your area, they may have to find a replacement car outside your zip code, which can dramatically affect your car's true value. For instance, if you reside in a big city within Texas, such as Dallas, Houston or Fort Worth, then the cost of replacing your car will likely be more expensive then if you lived in a suburb or more rural part of Texas.

2. When switching car insurance companies, you must cancel your insurance policy first
Though it is possible to cancel your coverage at anytime, it is important to note that many insurance companies require a written statement, including the date of termination, in order to officially close your car insurance policy. If you do not do this, and you receive and ignore the next bill, your policy will be canceled automatically by the insurance agency for delinquency of payment. The negative of this automatic cancellation is that it will show up on your credit record, which could potentially impact your credit score!

The safest thing to do when switching car insurance companies is to call your company and let them know that you are canceling your policy. The company will send you a cancellation request that needs to be filled out and sent back in.

3. Your car insurance company may be required to pay for sales tax and registration fee for a new car
Out of the 29 states that require car insurance companies to pay sales tax when you replace your totaled car with a new or used car, Texas is not one of them. But that doesn't mean you shouldn't request it. The insurance company policy states that they are required to make you "whole", which means that they will return you to where you were before the accident occurred. It should be noted that the tax is calculated based on the pre-accident value of your car. If you buy a higher priced car as the replacement, the insurance company will still go off the price of your original car (pre-accident).

4. Making a car insurance claim could increase your rates
Typically, insurance companies raise your car insurance rate by 40 percent in the event of an accident. However, some insurance companies will only increase your personal rate as opposed to your entire rate, but that is at the discretion of the insurance company.

If you are a good driver that does not have any driving violations, then you will want to consider going with a car insurance company that offers an "accident forgiveness" or "forgive the first accident" policy. This will help keep your insurance premium from fluctuating in the event that you file a car insurance claim.

5. Your credit score does more than affect your credit, it can also affect your car insurance rate
That's right; your credit score can impact how much you will pay for car insurance! Think it is not fair; well many insurance companies tend to disagree! Studies show that there is a direct correlation between your insurance risk score and the likelihood that you will file a car insurance claim. Your insurance score is used to evaluate your stability as a driver. So if you pay your bills on time, are in good standing and have a long standing credit history with lenders, then you will be more than likely be consider a dependable person. However, if you tend to pay your bills late, open and close credit frequently and are in poor standing with creditors, then you will likely be considered an unstable person and a potential threat on the road.

You can improve this "poor standing" by starting to pay your bills on time and establishing a good history with lenders. One way to start down this path is by contacting a free credit counseling service for guidance such as Consolidated Credit Counseling Services, Inc.

6. Adding a teen to your car insurance policy
Most insurance companies do not require you to add your teen to your car insurance policy when they are a certain age, only when they receive their license. On the other hand, if you are in a high-risk pool, you may be required to add them when they receive their driver's permit. If you forget to add your licensed teen, and they are involved in a car accident, they will be covered; however, your insurance company may charge you back premiums from the date your teen received their license.

For your Texas teen to begin the process of receiving their license, they must complete the following steps:

1. Pass the Driver Education Course and receive their Driving Eligibility Certificate
2. Present the Certificate, proof of ID, social security number and verification of school enrollment to the DMV
3. Practice driving with a parent or guardian supervisor
4. Complete a driver training course
5. Receive your Level Two provisional license
6. Practice driving without a supervisor
7. Take the Road Test after 12 months of practice
8. Receive your Level Three license

This process is for first time drivers who are at least 15 years old, but not yet 18. To ensure that the teen driver receives ample time to practice and to offset the number of accidents that involve teen drivers each year, Texas has different privileges for each provisional license:

Level One Learner's Permit
In order to obtain a Learner's Permit in the state of Texas, the teen's parent or guardian must sign for the teen's Leaner's Permit after proof of residency and social security have been provided to the DMV. Once the teen has held their Learner's Permit for a minimum of six months and have completed both the classroom and in car driving portions of driver's education course, they can "graduate" to Phase Two of the program.

Level Two Provisional License
The Level Two Provisional License allows Texas teen drivers to drive without supervision and with one friend under the age of 21. In addition to these restrictions, teens are not permitted to drive between the hours of 12am-5am. After 6 months these restrictions are lifted and teens are able to drive with more than one friend and during the restricted hours (but mind you, the license is still provisional.)

Level Three License
Texas teen drivers are eligible for the Level Three License once they turn 18 years old. Under this level, teens have full, unsupervised driving privileges.

To learn more about Texas teen driver laws and regulations, please visit the Texas DMV.

Even though most states typically have similar laws in place for car insurance, they do not typically have similar car insurance rates. That's because Texas car insurance rates are influenced by Texas' geographic location and its state laws. With that being said, it is always a good idea to shop around and compare the rates of various auto insurance companies. To assist you in the process Insurance.com offers an auto insurance comparison application. Here, you will be able to evaluate multiple rates from best-in-class insurance providers - helping you find the cheapest auto insurance coverage for your budget.