How Much are Auto Insurance Rates for Drivers with Bad Credit in Houston?

The words “bargain” and “auto insurance” probably shouldn’t be used together, especially when you are shopping around for the cheapest car insurance for drivers with bad credit. In an attempt to save some money, let’s get started by showing you a few of the factors that determine auto insurance rates, and see how we can help you shave a little off the next policy you buy.

One of the more important things that determine the annual cost of car insurance is where you normally keep your vehicle in Houston. Areas with more people or even just a higher incidence of claims tend to have higher rates, whereas areas with fewer weather claims and lower vehicle theft rates get the luxury of paying less.

The table below shows the most expensive areas in Texas for drivers with bad credit in which to purchase auto insurance. Houston is listed at #2 with the annual price of $1,891 for coverage, which is about $158 each month.

How much does car insurance cost in Houston, TX?
Rank City Annual Rate
1 McAllen $1,936
2 Houston $1,891
3 Dallas $1,855
4 Brownsville $1,851
5 Laredo $1,851
6 Amarillo $1,840
7 Garland $1,832
8 Mesquite $1,825
9 Beaumont $1,772
10 Grand Prairie $1,757
11 Pasadena $1,740
12 Irving $1,736
13 Arlington $1,692
14 San Antonio $1,671
15 Fort Worth $1,670
16 Lubbock $1,665
17 Austin $1,627
18 McKinney $1,625
19 Carrollton $1,615
20 El Paso $1,584
21 Plano $1,576
22 Corpus Christi $1,572
23 Waco $1,537
24 Killeen $1,533
25 Abilene $1,499
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Table data uses comparative as the specific Houston residence address can affect premium rates greatly.

Figuring out which companies quote the most affordable car insurance rates for drivers with bad credit involves more time in order to find a policy that fits your budget. Each insurer has a different formula for setting prices, so we need to take a look at the car insurance companies that tend to have lower prices in Texas.

It’s a good idea to know that Houston, TX car insurance rates are impacted by many things which can substantially change your annual premium. Improving your credit rating, increasing liability limits, or getting a ticket for running a stop sign can trigger rate changes that can make some companies cheaper than before.

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Travelers generally has some of the most affordable car insurance rates in Houston at around $1,052 a year. This is $852 less than the average policy premium paid by Texas drivers of $1,904. USAA, Germania Mutual, Texas Farm Bureau, and California Casualty also rank well as some of the more affordable Houston, TX car insurance companies.

As depicted above, if you buy coverage from USAA and switched to Travelers, you may realize yearly savings of approximately $32. Insureds with Germania Mutual could save as much as $192 a year, and Texas Farm Bureau insureds might cut rates by $195 a year.

Bear in mind that those prices are averages across all drivers and vehicles in Texas and are not factoring in an exact zip code location for drivers with bad credit. So the insurer that fits your age and vehicle best may not even be in the list above. That is why you need to quote rates from as many companies as possible using your own personal information and vehicle type.

Difference between liability only and full coverage rates

Finding the cheapest car insurance is probably important to most people, and one common way to save on the cost of insurance for drivers with bad credit is to only buy liability coverage. The example below compares insurance prices with full physical damage coverage compared to only buying the minimum liability limits required in Texas. Data assumes no driving violations, no at-fault accidents, $250 deductibles, drivers are single, and no policy discounts are applied.

If averaged for all ages, full coverage costs an additional $2,000 per year more than just insuring for liability. Many drivers will wonder when is it safe to stop buying full coverage. There is no specific rule to stop paying for physical damage coverage on your policy, but there is a broad guideline. If the annual cost of having full coverage is more than about 10% of the vehicle’s replacement cost less your deductible, then you might want to think about dropping full coverage.

For example, let’s say your vehicle’s replacement cost is $4,000 and you have $1,000 physical damage deductibles. If your vehicle is totaled in an accident, you would only receive $3,000 after paying the physical damage deductible. If premium cost is more than $300 annually for full coverage, then you may need to consider dropping full coverage.

The chart below demonstrates how deductible levels can influence insurance costs when trying to find cheap insurance for drivers with bad credit. The data is based on a single male driver, comp and collision included, and no other discounts are factored in.

A 30-year-old driver could pocket $422 a year by changing their physical damage coverage from a $100 deductible up to a $500 deductible, or save $634 by switching to a $1,000 deductible. Even younger drivers, such as the Age 20 example, could possibly save as much as $1,236 or more by choosing larger deductibles on their policy.

When using a larger deductible, it will be required to have additional savings on hand to cover the extra out-of-pocket expense, which deters some people from using high deductibles.

Don’t make the mistake of not shopping around

Houston car insurance rates are influenced by many factors that will increase or decrease the cost of coverage. Improving your credit rating, having a teen driver, or getting caught speeding can trigger changes in premium that may make certain companies cheaper than competitors.

In addition to those changes, auto insurance companies change rates as often as every quarter to ensure their profitability. Significantly higher claims may cause more expensive prices, while a profitable period can cause lower-priced Houston car insurance rates.

To illustrate this point, the chart below analyzes the cheapest car insurance in Houston, TX for a 40-year-old female driver with no violations or accidents, and a decent credit rating. If we compare prices based on her personal profile, Travelers quotes the lowest car insurance rates in Houston at $1,363 annually. This is $541 less than the average rate paid by Texas drivers of $1,904. USAA, Texas Farm Bureau, Germania Mutual, and Esurance are also on the list of the cheapest Houston, TX auto insurance companies.

In the next rate comparison, we’ll give the driver in the first chart a couple of claims, a lower credit score, and a couple of points charged on her driving record. Since each auto insurer has their own formula for setting prices, comparing prices will most likely result in a significantly different list of affordable Houston car insurance companies as shown below.

Mercury now has the cheapest price in Houston, TX with State Farm, USAA, Nationwide, and Safe Auto now rounding out the top five. This example illustrates why it is important to do a thorough rate comparison to get cheap auto insurance rates for drivers with bad credit.

Insurance prices are made up of many risk factors and can decrease or increase without notice, so the cheapest rate the last time you shopped around may now be costing you a lot of money.