Under Texas law, insurance companies are expected to charge their policyholders fair rates that are reasonable. While the Texas Department of Insurance does not approve an insurance company’s rates before it charges a premium to a policyholder, if the Department of Insurance discovers that an insurance company charges too high of rates, the agency can require the company to issue refunds to the policyholders it took advantage of.
How Rates Are Determined
When an insurance company is deciding what to charge someone, the company will go through a process called “underwriting.” The rate the insurance company decides to charge you is called a premium. There are several factors that insurance companies consider when setting a rate, including but not limited to:
- Your age. The highest rates are charged to men under the age of 25 and women under the age of 21. Rates will rise again after someone turns 70.
- Your driving record. If you’ve had an accident or received traffic tickets, you’ll be charged more. If you have too many points on your record, some insurance companies may refuse to insure you because they feel you’re too high of a risk.
- If you live in the city vs. a rural area, your rates will be higher. Why? Because in cities there is a higher risk of accidents and auto thefts.
- If you have a luxury, high-performance, or sports car, your rates will be higher. Also, if your car costs more to repair, you’ll pay a higher premium.
- If you drive your car to and from work, your rates will be higher.
- If you drive your car for business you’ll pay higher rates.
- Your credit score. If you have poor credit, you could pay higher premiums because people with bad credit are more likely to commit insurance fraud.
If you need to file a car accident claim, we encourage you to contact our firm to schedule an initial consultation with an experienced member of our legal team.