Gender and Car Insurance: What Causes the Difference in Rates?
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Car insurance is based on various factors, but one of the most contentious is gender. Some states don’t allow insurance companies to consider gender when setting car insurance premiums, but the large majority of the U.S. does.
The idea of charging one gender more for car insurance may seem unfair, but the practice is rooted in statistics.
Women are less likely to be involved in accidents, receive DUI charges, drive expensive cars, or get issued tickets than men. Women also drive less on average. Because of this, women are known to pay less—sometimes substantially less—than men for car insurance.
Our research at Jerry shows that age and credit checks also contribute to the difference between insurance rates for male and female drivers. Your gender can be used to determine your car insurance rates in most states.
How do age and gender impact car insurance rates?
Young drivers don’t have as much experience driving and they’re 4.5 times more likely to get into an accident.
According to the Insurance Institute for Highway Safety (IIHS), the fatal crash rate per mile driven for 16 to 19-year-olds is nearly three times the rate for drivers 20 and over. Unfortunately, this means insurance premiums are often more expensive for drivers under 25.
Young male drivers are shown to be one of the riskiest types of drivers. The IIHS reported that two in three teenagers killed in crashes in 2019 were males. Age and gender can intersect to cause markedly higher car insurance rates for young men.
How do credit checks affect premiums for male vs. female drivers?
Credit checks are another way in which insurance companies establish monthly premiums. Jerry compiled data on how premiums differed between income levels in states that enforce credit checks versus states that prohibit them. We found that people in states with credit checks pay more for insurance than those with no credit checks across all income levels.
This data also shows that men’s insurance premiums were impacted more than women’s by credit checks. For example, low-income men are paying 15% more in credit check states than they would in states without them, while low-income women are only paying 13.3% more.
In dollar amounts, low-income men pay an average of $14 more per month than women in no credit check states and $20 more in ones with checks. This means credit checks are causing the difference in premiums between men and women to be even larger than usual.
Even without accounting for gender, men could still pay more than women on average in states with credit checks.
Will insurance companies always use gender to determine premiums?
Gender-based premium increases might not be permanent, as six states have already prohibited the practice. Still, insurance companies’ policies on gender vary widely depending on what they decide to emphasize when establishing rates and where they’re located.
Nonbinary inclusion efforts are also pushing to allow a third gender option on identification documents, including driver’s licenses. This means the current system that uses the gender binary to determine rates would have to be changed. 17 states currently permit a third gender option on state IDs and driver’s licenses.
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