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Gender and its impact on auto insurance rates

By Posted : March 26, 2019

Nearly all states allow insurers to set auto insurance rates based partially on gender. This process can increase your rates depending on your age and gender. 

Activists are pushing legislation in many states to include a third gender option of self-identification on official documents. Gender rights and equality issues are coming to the forefront. As more and more states make the necessary changes in official records for how gender is listed, by making available a gender-neutral option, companies that use gender as a rating factor will have to take notice.

Insurance companies can’t ignore the gender issue and will have to make changes, either on their own or when forced to by state laws. Currently, eight states allow a third gender on driver's licenses, IDs, or birth certificates: Oregon, Washington, D.C., California, Maine, Colorado, Minnesota, New York, and Washington state.

"I wouldn't be surprised if other states begin to consider prohibiting the use of gender when setting car insurance rates as more people and state legislators are challenging the notion of using just 'male' and 'female' on identity forms," Penny Gusner, consumer analyst at Insurance.com, said.

When it comes to setting rates, only California, Hawaii, Massachusetts, Montana, North Carolina, and Pennsylvania ban insurers from using gender.  A seventh state -- Michigan -- forbids the use of gender, but reports suggest that a loophole in the law allows the practice, according to Gusner.

 

How do auto insurers set rates?

Although there's no gold standard on how auto insurers set rates, there are a handful of factors that typically go into their decision.

Megan MacBey, account executive at Eagle Insurance Group, in Raynham, Massachusetts, said the factors include:

  • Is the car foreign or domestic?
  • What was the cost of the car?
  • Is it a big car or a small car?
  • Is it on the high-theft list?
  • Where's the car garaged?
  • What is the primary driver's driving record look like? (if it's good, it will earn credits; if it's bad, it will get debits)
  • How many years has the primary driver had his or her license?
  • What's the annual mileage?
  • Is there an anti-theft system?

Some risks are easier to assess than others -- statistics show young, male, teen drivers to be riskier than almost all other categories. The fatal crash rate per mile driven for 16- to 19-year-olds is the nearly three times the rate for drivers over 20. Of those fatalities, the number of males versus females is almost double. This puts them in a higher rate slot.

Each auto insurer's underwriting department has a different set of rules when they're setting prices.

 

Why do insurers use gender when devising auto insurance rates?

Insurance is based on risk. Men drive more than women. They’re more likely to get in accidents, get tickets, and get arrested for DUI. Men are also more likely to drive a car that’s more costly to insure.

Car insurance companies use many factors when creating rates:

  • Gender
  • Claims history and severity
  • Age
  • Your residence
  • Credit score
  • Marital status
  • Type of vehicle

Insurers don’t weigh them all the same. Underwriting departments vary on how much importance they put on each.

 

Do males or females pay more for auto insurance?

Female drivers often pay less than men, but there are exceptions. 

Rates fluctuate based on age, as well as the insurance company. Female drivers from age 16 to 24 pay, on average, around $500 less (15%) a year for car insurance compared to their male counterparts, according to Insurance.com's rate analysis.

That rate data shows from age 25 to 65, rates for males and females are within 5% of each other, with rates for males a tad cheaper from age 45 to 75. After age 75, females start again to pay less, but only around 7%, or $100, annually.

Here are the average rates by age and gender:

AgeFemaleMale$ difference male vs. female% Male greater than Female
16$6,479$7,381$90214%
20$2,862$3,385$52318%
25$1,706$1,784$785%
35$1,573$1,556-$17-1%
45$1,470$1,468-$20%
55$1,346$1,380$343%
65$1,378$1,426$483%
75$1,615$1,694$795%
85$1,920$2,053$1337%

Methodology: Insure.com commissioned Quadrant Information Services in March 2018 to get quotes for a 2017 Honda Accord for a policy with terms of 100/300/100 with a $500 deductible. We used 10 ZIP Codes for each state for at least six car insurance companies.

 The numbers above are averages, but you can find wide variations depending on the company. Two of the major companies -- Amica and Commerce -- have the same rates regardless of gender but vary based on age. Other insurers, like American Family, use gender for some ages but not others.

Here are the differences by company:

Age 25Age 45Age 65
CompanyFemaleMaleFemaleMaleFemaleMale
Allstate$1,484$1,525$1,338$1,323$1,315$1,330
American Family$839$978$842$842$765$765
Amica$1,180$1,180$1,190$1,190$1,927$1,927
Commerce$964$964$824$824$724$724
CSAA$1,558$1,762$1,488$1,488$1,451$1,451
Erie$688$718$550$550$578$578
Farmers$1,303$1,333$1,145$1,142$1,003$1,088
GEICO$987$983$874$921$845$915
Liberty Mutual$1,592$1,574$1,470$1,470$1,394$1,394
Mercury$2,355$2,449$1,937$1,939$1,981$1,850
Nationwide$1,207$1,306$1,005$1,025$957$1,011
Progressive$1,397$1,406$1,132$1,086$993$1,064
Safeco$1,464$1,500$1,241$1,319$1,059$1,246
State Farm$1,574$1,710$1,392$1,392$1,117$1,117
USAA$600$719$515$509$517$524

As this chart, it’s vital that you shop around when buying auto insurance, so you find a plan that makes the most sense to you for the cheapest rates.

 

Why do teens pay the most for auto insurance?

Teen drivers are the riskiest age group to insure. They're inexperienced and cause more crashes.

According to insurance.com research, 16-year-old males pay on average $902 more than their female counterparts or 14% more. The good news is that as these young male drivers age and get more experience, their costs and the differentiation between females of the same age drop… at least for a little while.

At 20, they pay on average $523 more than females; at 25, the difference drops to $78. Males and females usually pay similar rates until males turn 55. Then, men start to pay more than females again.

While this information is the average, remember everything varies by state.

"In Massachusetts, all drivers who have less than six years of driving experience pay significantly higher premiums regardless of age. If you don't get your license until you're 25, you're going to pay more until you're 31," said MacBey.

According to MacBey, all is not lost if you are a young or inexperienced driver.

"There are some discounts geared toward inexperienced operators. Some insurers will offer credits for completed defensive driving courses. There is also a good student discount, which if the driver maintains a 3.0 or better in high school or college, can earn credits [on a policy]. All companies are different as far as credits available, so the driver should check with their agent/company to find out what is available specifically for them."

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1 Comment
  1. Michael H.

    One problem with this post is it assumes that , because men are prone to take more risks on the road than women, that that makes them the 'bad drivers'. I beg to differ, or it least clarify. Men are, generally, riskier drivers, but tend to be more gifted with respect to hand eye coordination. However, because women are, generally, more more prudent, they tend to avoid accidents and traffic violations (at least in certain age ranges).

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