Texas Has 6th-Highest Insurance Burden Nationally Amid Rising Premiums
Texas ranks sixth in the United States for the highest insurance burden relative to median income, with costs consuming approximately 10.95% of take-home pay.
This analysis by MoneyGeek highlights that Texans pay an average of $8,653 annually for combined home and auto insurance, representing the fourth-highest total insurance expenditure nationally.
The state's elevated insurance costs are driven by a combination of factors including increased incidence of severe weather events such as thunderstorms, tornadoes, hail, and flooding, which contribute to rising home insurance premiums. According to the Texas Department of Insurance, home insurance rates increased nearly 19% in 2024 and 21% in 2023; auto insurance rates also rose by 24% in 2022 and 25% in 2024. Increased vehicle use and material costs further escalate auto coverage expenses.
Economic growth in Texas has led to rising home values and construction of costly new residences, amplifying insurance premiums. While higher incomes partially offset the insurance burden compared to neighboring states like Oklahoma, the financial impact remains significant. Additionally, litigation costs related to tort claims have consistently grown in Texas, imposing upward pressure on premiums due to large jury verdicts impacting insurers.
Comparatively, states with lower insurance burdens such as Vermont and Washington benefit from favorable geography with fewer natural disasters, while regulatory environments also influence premium levels. For example, California enforces stringent limits on home insurance pricing, mitigating the impact of natural disasters and insurer market exits.
Consumers in Texas can potentially moderate their insurance costs through credit and driving record management, opting for higher deductibles, and bundling insurance products as mitigating strategies. Understanding these dynamics is key for insurance professionals navigating market conditions in Texas and similar high-burden states.