Why Texans’ car insurance rates are going up

Hanah Lopes

AUSTIN (KXAN) — “I’m just tired of handing out my money left and right,” said Jasan Gibbons.

Sitting in his guitar repair shop, ATX Guitarworks, on Jones Road, he acknowledged it’s getting harder to keep it beating.

He’s facing a possible increase in rent at his storefront and thinks the economy is impacting his customers.

“They have to prioritize, prioritize that pretty low. So, the people coming through the door, sometimes it’s few and far between,” he said.

Gibbons is also seeing a jump in personal bills. His car insurance went up nearly 25% when he renewed his policy about two months ago.

“Like, ‘I don’t think so,’” he remembered thinking. “I have no record. I’ve never even had a parking ticket. I’ve never had a speeding ticket.”

Gibbons said a Progressive insurance agent told him the increase was due to inflation.

Rich Johnson with the Insurance Council of Texas said that’s the biggest factor driving up rates in the industry this year. He said on average, Texans are seeing a 20% spike.

Johnson said although they’ve seen rates steadily increase since around 2017, this is a bigger spike than usual.

“During the pandemic, we saw those used vehicle prices skyrocket. That’s a cost that if there’s damage or if there’s a totaled car, that the insurance company is going to be paying out. And we really haven’t seen those prices come down too much,” Johnson said.

Joe Lamping, the owner of Flamingo Automotive on Guadalupe Street, said he’s seen repair costs go up 10-15%. He’s also paying his crew more.

“They need a living wage to live in this town,” he said.

According to insurance company Progressive, the demand for car technicians outpaces supply 5-1, also pushing up labor costs. Lamping said repair times are also up.

“There are supply chain issues, we are finding that parts that were readily available aren’t always available when we want them,” Lamping said.

He said more people are also getting repairs since the supply chain issues and inflation have pushed them away from buying new cars.

“We’re seeing a shift from our customers that were considering buying new cars, asking us if we can make this car go for several more years. Most of the time, we can do that,” Lamping said.

He said typically, people would want a new car once they hit 100-120,000 miles. Now, his customers are trying to get closer to 200,000 miles or more.

This year, Lamping said they’re running seven to nine days behind on repairs. In previous years, that was two or three days.

Inflation costs, labor costs, supply chain and repair delays — those are all factors in the rising rates, according to Johnson.

“If your car is at the shop, say five days longer than it would have been three years ago, that’s five extra days that your insurance company is paying for that rental car,” Johnson explained.

He also said the rise in catalytic converter thefts factors into your insurance rate.

“The latest statistics are in 2021, there was about 15,000, catalytic converter thefts, as opposed to 2019, where there was roughly 3,400. That’s a huge increase,” Johnson said.

He said the prices of catalytic converters have “skyrocketed,” because of minerals like platinum that are inside them.

“The precious metals that are inside are mined overseas, some of which in the Ukraine and Russia and area,” he said.

Johnson said stolen converters aren’t just a headache and cost for customers, but also for insurance companies, because they’re typically a covered loss.

“And not only are you replacing that catalytic converter, but then you have to, you know, they go into that car, and they saw it off. So, that’s repairs that you got to make, in addition to the cost of the actual catalytic converter,” he explained.

Kelley Blue Book, an automotive industry company, said replacing a stolen catalytic converter and repairing car damage from a theft can add up to an insurance claim of $3,000 or more.

“I drive probably 4,000 miles a year, tops,” said Gibbons, who doesn’t plan to renew again with Progressive. “So, I don’t know, it’s just one more example of like, things being spiked out of control.”

It means less money for food and entertainment, including his childhood passion of playing guitar.

“I’m tired of just paying and paying and paying and… feeling helpless,” Gibbons said.

Tips

Johnson suggests calling your car insurance company to review your deductibles.

“Maybe you have too much coverage on your on your car,” he said. “If you have a student, do they have good grades? Take a defensive driving class, pay the $75 or something like that, you may save a few dollars there.”

Johnson said Texas also has a big and competitive insurance market.

“We have hundreds of companies that are writing insurance. So… number one thing that we tell people is to shop. Get online… get an insurance agent to kind of shop for you, shop on your behalf with multiple companies,” he said.

Lamping said if you’re planning to keep your current car longer than intended, try to set aside a maintenance budget for it.

“Things are always wearing out, things are always needing service and replacement. So, we really try to get our customers on a maintenance program where we can let them budget and plan, and that way we can keep that car and maintain it and make it be solid reliable transportation for many years,” he said.

https://www.kxan.com/news/texas/why-texans-car-insurance-rates-are-going-up/

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