The words "low-priced" and "insurance" really don't belong together, in particular when you are shopping around for the cheapest car insurance for drivers with bad credit. Because of the high cost, let's take a look at some situations that can significantly affect car insurance rates, and find a few ways to reduce the cost of the next policy you buy.
For people with poor credit, one of the more important criteria that are looked at to determine the cost of insurance is where you call home. Areas with more people or even just a higher incidence of claims like McAllen, Dallas, and Amarillo likely pay more, whereas areas that tend to be more rural can boast about having cheaper rates.
The illustration below shows the highest-priced areas in Texas for drivers with bad credit in which to purchase auto insurance.
|Rank||City||Premium Per Year|
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Rates are approximated as the specific zip code location can revise auto insurance rates greatly.
Deciding which companies quote the best insurance rates for drivers with bad credit in Texas requires more work thank just comparing rates from one or two companies. Each insurance company has a different formula to determine rates, so we'll go over the insurance companies with the most affordable rates in Texas.
Cheap Insurance Rates with Bad Credit
|Rank||Company||Cost Per Year|
|3||Texas Farm Bureau||$1,211|
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Travelers offers some of the best car insurance rates in Texas at around $1,052 annually. This is $852 less than the average policy premium paid by Texas drivers of $1,904. USAA, Texas Farm Bureau, Germania Mutual, and Esurance are also some of the more affordable Texas car insurance companies.
In this example, if you are insured with Germania Mutual and switched to USAA, you may see savings of about $160. Policyholders with Esurance might save as much as $337 a year, and California Casualty customers might reduce prices by as much as $354 a year.
Bear in mind that those premium estimates are averaged across all insureds and vehicles and and are not calculated with a price surcharge for drivers with bad credit. So the insurer that can offer you the best rate may not even be in the top 23 companies in the list above. That emphasizes why you need to get rate quotes using your own driver information and specific vehicle type.
The vehicle model on the policy is a large consideration when trying to find the most economical auto insurance for drivers with bad credit. Vehicles with limited speed and performance, modern passenger safety features, or a track record of few liability claims will cost significantly less to insure than higher performance models.
The next table illustrates coverage costs for the most economical vehicles to buy coverage for.
|Make, Model, and Trim Level||Estimated Cost for Full Coverage|
|Honda Accord EX 4-Dr Sedan||$1,010|
|Honda CR-V EX-L 4WD||$1,033|
|Chevrolet Malibu Hybrid||$1,192|
|Toyota RAV4 Sport 4WD||$1,201|
|Ford Explorer Limited 2WD||$1,215|
|Jeep Wrangler Unlimited Sahara 2WD 4-Dr||$1,236|
|Ford Escape XLT 4WD||$1,268|
|Ford Edge SE 2WD||$1,272|
|Chevrolet Silverado 2500HD LTZ Crew Cab 4WD||$1,277|
|Chevrolet Silverado LT Regular Cab||$1,279|
|Toyota Tacoma 4WD||$1,297|
|Ford F-350 XLT Crew Cab Harley Edition 2WD||$1,322|
|Ford Focus S 4-Dr Sedan||$1,343|
|Chevrolet Impala LS||$1,351|
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Above prices assume single female driver age 50, no speeding tickets, no at-fault accidents, $1,000 deductibles, and Texas minimum liability limits. Discounts applied include homeowner, multi-vehicle, safe-driver, multi-policy, and claim-free. Price estimates do not factor in specific garaging location which can increase or decrease premium rates significantly.
Based upon the rates shown, models like the Honda Accord, Honda CR-V, Toyota Prius, and Chevrolet Malibu will be a few of the cheaper vehicles to insure for people with poor credit. The cost of a car insurance policy will be more expensive just due to the fact that there is more liability exposure for drivers with bad credit, but overall those makes and models will probably have the best rates compared to all other vehicles.
The illustration below shows how choosing a deductible can influence insurance prices when quoting cheap insurance for drivers with bad credit in Texas. The data is based on a married female driver, full coverage, and no additional discounts are factored in.
A 50-year-old driver could cut expenses by $260 a year by switching the physical damage coverage from a $100 deductible to a $500 deductible, or save $394 by selecting a $1,000 deductible. Even younger drivers, like the 20-year-old, could save as much as $646 or even more by choosing a larger deductible amount. When using a larger deductible, it is important to have plenty of money set aside to enable you to pay the extra out-of-pocket expense, which is the primary disadvantage of high deductibles.
Full coverage versus liability-only in Texas
Paying a lower price for insurance is probably important to the majority of vehicle owners, and one of the easiest ways to find cheap insurance for drivers with bad credit in Texas is to not buy full coverage. The example below shows the comparison of insurance prices with and without physical damage coverage. The price estimates are based on no violations or accidents, $250 deductibles, single marital status, and no additional discounts are factored in.
As an overall average, comprehensive and collision coverage on your policy costs an extra $2,671 per year more than buying just liability insurance. That is a large expense which might make you wonder when is the right time to remove full coverage. There is no written rule of when to phase out comp and collision coverage, but there is a guideline you can consider. If the annual cost of comprehensive and collision coverage is more than 10% of any settlement you would receive from your insurance company, then it might be time to buy liability only.
There are a few cases where buying only liability insurance is not a good plan. If you have an outstanding loan on your vehicle, you have to keep full coverage in order to satisfy the requirements of the loan. Also, if your emergency fund is not enough to purchase a different vehicle in case of an accident, you should keep full coverage.
Discount Texas car insurance
Auto insurance companies that provide policies for drivers with bad credit may provide rate discounts that could potentially reduce rates by 30% or more if you qualify for them. A list of companies and some of their more popular discounts are outlined below.
- State Farm may offer discounts for defensive driving training, Steer Clear safe driver discount, student away at school, passive restraint, and safe vehicle.
- Nationwide has savings for multi-policy, anti-theft, defensive driving, family plan, accident-free, and good student.
- GEICO may have discounts that include anti-lock brakes, defensive driver, seat belt use, emergency military deployment, and daytime running lights.
- AAA offers premium reductions for good driver, anti-theft, good student, education and occupation, and multi-car.
- 21st Century offers discounts including automatic seat belts, student driver, theft prevention, homeowners, teen driver, and early bird.
- The Hartford policyholders can earn discounts including driver training, bundle, air bag, vehicle fuel type, good student, and defensive driver.
The diagram below visualizes the comparison of auto insurance rates with and without discounts being applied to the rates. The costs are based on a female driver, no claims or violations, Texas state minimum liability limits, full coverage, and $100 deductibles. The first bar for each age group shows insurance cost with no discounts. The second shows the rates with accident-free, multiple policy, safe-driver, homeowner, defensive driving course, and anti-theft discounts applied. When discounts are factored in, the the average yearly reduction on insurance for drivers with bad credit is 28% or $633.
Don't stick with an overpriced policy
Texas insurance rates are influenced by many factors which can significantly increase or decrease the price you have to pay for coverage. Simply having a birthday, having a teenage driver, or getting a ticket for careless driving can trigger price changes that can make some companies more affordable than before.
In addition to those changes, insurers change prices at least once a year to adjust for unexpected claims or profits. Higher than normal claim frequency or severity can result in additional price hikes, while better underwriting can result in lower-priced Texas car insurance rates.
As an example, the data below shows the companies that have the cheapest car insurance in Texas for a 40-year-old male driver with no prior claims, no tickets, and excellent credit. If we estimate prices based on his personal profile, Travelers might quote the best car insurance rates in Texas at $1,052 each year. This is $852 less than the average rate paid by Texas drivers of $1,904. USAA, Texas Farm Bureau, Germania Mutual, and Esurance are the rest of the cheapest Texas auto insurance companies.
The example below compares rates after we give the driver in the first chart an at-fault accident, slightly worse credit, and a stop sign violation. Since each auto insurer has their own formula to set policy rates, getting updated rate quotes will most likely result in a different ranking of companies as shown below.
Mercury now has the best price on car insurance in Texas with State Farm, Safe Auto, Nationwide, and USAA completing the list. This illustrates why Texas drivers need to shop around to get the most economical car insurance rates for drivers with bad credit.
Rates can be determined by many different factors and change dramatically, so the best price the last time you shopped your coverage around may now cost much more than other companies.