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Texas Department of Insurance
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May 2024

Outside factors affect home, auto insurance costs


Numerous factors affect the cost of claims that insurance companies pay as their obligation under an insurance policy.

These factors include:

  • Inflation, which can affect the cost of new and used vehicles, car parts, and repairs. It can also increase the cost of building materials and construction labor. Supply chain disruptions can affect the flow of construction materials and car parts from around the world.
  • Riskier driving, which results in more severe and costly accidents. As companies pay more claims (and higher vehicle repair and replacement costs), they’re more likely to raise rates to make up for those costs.
  • Weather events, which in Texas include freezes, hurricanes, hailstorms, tornadoes, wildfires, major thunderstorms, and more. The frequency and size of these events add to claim costs.
  • Reinsurance, which is a form of insurance for insurance companies. Companies buy reinsurance to spread their risk and be financially stable if a major disaster occurs. Higher reinsurance rates affect what insurance companies charge customers.

Have a question about insurance? Call the Texas Department of Insurance at 800-252-3439 or visit