Insurance regulators in Texas announce that the state will increase requirements for Texas auto insurance policies by 2011. Analysts believe that the new mandate could inevitably trigger another round of increase in the premium rates.
Texas Department of Insurance plans to revise the current provisions on minimum insurance liability requirements in the state. Industry analysts say that the decision came after TDI perceived that medical and repair costs for automobiles are set to increase significantly in the near future, adding that it is a safeguard to make sure that drivers have enough coverage to protect them when they need it.
By 2011, the formula for drivers who will apply for a policy is bound to change from 25-50-25 to 30-60-25. This means that a person will be required to purchase insurance which provides coverage of $30,000 for an injured person, a $5,000 increase from the present rate. The current coverage for injuries sustained in an accident is at $50,000 and is set to increase to $60,000. Meanwhile, the coverage for property damage will remain intact at $25,000, a proposal which puzzles insurance providers.
Companies say that majority of vehicles today cost more than $25,000. Insurance representatives tell consumers that if they purchase a policy which only offers that amount of coverage, the rest of the repair cost will be taken from their own pockets.
Consumer groups project that the increase in minimum liability requirements will push another price hike in insurance rates. Insurance providers themselves admit that the costs will have to rise eventually as 2011 nears. On the other hand, analysts consider a much earlier date for the increase of premium rates.
TDI, however, tells vehicle owners that the increase is not going to significantly affect them if they maintain a good driving record. The Department says that insurance carriers provide discounts to drivers who have not engaged in any accident in the last few years. Discounts are also given for drivers who have faithfully obeyed traffic laws. They add that good driving can give a policyholder up to a 20 percent slash off his premium.
Industry analysts say that insurance providers deal more favorably with low risk clients. These are car owners that are found by statistics to be less likely to meet accidents. The list includes drivers who have completed advanced safety courses. Carriers also advise drivers not to file claims when the damages they sustain in a collision are minimal since their number of claims greatly affects their premium rates.