Janna Mullane Head of People & Culture | Insurify
Texans facing high auto insurance premiums may soon find relief as Senator Roland Gutierrez introduced a bill to the Texas Senate in February, proposing a state-funded car insurance option for all residents. The initiative aims to provide affordable coverage and stimulate competition within the state's auto insurance market.
Auto insurance rates in Texas surged by 23% in 2024 due to inflation and increased claims from extreme weather. A report by Insurify forecasts an additional rise of 6% in 2025, bringing the average annual rate for full-coverage insurance to $2,886.
The proposed Texas Automobile Insurance Public Option Act would be accessible to all Texans who can prove residency and have a valid vehicle registration. This program differs from the existing Texas Automobile Insurance Plan Association (TAIPA), which requires drivers to receive rejections from at least two insurers within 60 days before enrollment. Unlike TAIPA, the new public option would not impose such prerequisites.
Other states like California, Hawaii, New Jersey, and Maryland also have state-funded car insurance programs but restrict them to low-income drivers with multiple eligibility requirements. In contrast, the Texas proposal offers minimum liability requirements along with optional coverages such as uninsured/underinsured motorist protection and comprehensive collision coverage. It includes a sliding scale for low-income drivers based on risk adjustments.
Funding for this public option would come from premium profits and state contributions. Enrollment is expected annually, similar to health insurance open enrollment periods; however, drivers experiencing qualifying life events could enroll anytime.
Senator Gutierrez supports this bill as a measure against rising costs: "The skyrocketing costs of groceries, healthcare, home, and auto insurance have stretched Texans’ pocketbooks thin," he told NBC's Dallas-Fort Worth affiliate. "It’s time that the state of Texas steps in and offers a public insurance option that will provide affordable, reliable coverage for everyone at a fraction of the cost."
The bill also seeks to encourage competition among insurers. According to Insurify data, full-coverage premiums increased by 15% between 2023 and 2024 with further hikes anticipated in 2025. Gutierrez believes that offering state-provided auto insurance could lower rates without shareholder pressures or excessive marketing expenses: "This is coverage that you can count on, that will force insurance giants to bring their prices down or justify the cost," he explained.
Currently under review by the Texas Senate Business and Commerce Committee since its introduction in February, if passed by both legislative chambers and signed by Governor Greg Abbott into law, eligible drivers might begin obtaining coverage starting January 1st of next year.
Alerts Sign-up