Money & The Economy

State Farm Dropping Insurance Rate by 3% in Texas

At a time where everything seems to be going up and making us pay more and more, there comes State Farm dropping those rates by 3%. This is big, considering that they are the largest auto insurer in Texas, and a cheap auto insurance Texas is not that easily found.

This change is expected to save the average customer around $35 a year. This might not seem much at the start, but if you are a driver this year, chances are that you will be a driver next year as well – which means that you’ll be saving a lot of money through the course of your life.

Rates Down, Reactions Up

According to Mark Hanna, the Insurance Council of Texas’ spokesman, it “really stands out to see anyone lowering vehicle insurance rates instead of making them bigger.”

Recently, State Farm made payments to a lot of Hurricane Harvey victims in Texas with auto claims totaling $74.8 million. Still, the company claims that the rate drop has nothing to do with the risks going down. If anything, it’s related to the costs savings that the company is trying to pass on to the customers. Insurance rates have been reduced in other states as well.

Since State Farm is now able to receive claims virtually – without having to send experts into the field – the company ends up with profit and surplus therefore making them able to lower the rates.

The Reverse of a Trend

The lowering of auto insurance rates officially marks the reverse of a trend. In 2016, State Farm raised those rates by 9.2%, while in 2017 it was raised by 9.5%. This was caused mainly by low gasoline prices which encouraged people to take their car and go down the road increasing the risks of accidents and injury.

Considering the hurricane and how many cars were totaled at that point, the next logical step would be to bump up the rates even more. Extra payments had to be made, so it’s logical that they would ask for more money. Except they didn’t.

According to the Texas Department of Insurance, while increases are the most common occurrence, rate drops do happen. These drops attract more customers therefore increasing the company’s profit.

What’s certain, however, is that these drops don’t bother us, users, in the slightest. In a time where everything seems to be going up, it’s nice to see that some companies are bringing it down. It makes you less tempted to leave your car in the garage – all this because you could not afford to pay your insurance.

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