Misc Published May4, 2019 By Ernest Hamilton

How Gender Affects Car Insurance

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Gender and the affects of car insurance
(Photo : Bruce Mars)

Why is it that, in some states, men pay less for insurance than women? Everquote's stats on safe driving between genders shows that there isn't a significant gap in how they behave. However, despite that, some states see women as more risk-prone than men, and other states see the complete opposite. While the per-state costs of insurance may vary, taking all the values as a whole country-wide show that it is men who pay as much as $15,000 more for insurance on average, based on CBS News reports. Why are these coverage rates so different between genders, and sometimes within neighboring states? Is it even fair to judge a driver based on their gender?

Gender and Driving Behavior

A study published by the Social Institute Research Centre in 2004 mentioned that while there was a difference in rates of accidents between male and female drivers, it was difficult to ascertain what the cause of that discrepancy was, since it didn't hinge on the competence of the driver, but may be due to psychological or behavioral reasons. A more recent study published in Accident Analysis & Prevention noted that male drivers tend to be riskier than female drivers over the 503 sample cases they tested. Decisions that men make, women may not and vice versa. But that psychology might not even be based on the person's gender, but rather their life experiences.

Gender-Based Pricing and Unfairness

Business Insider reported that California passed a law that made it illegal for insurance companies to adjust prices based on gender since it would constitute discrimination. The fairness of this ban can be questioned since as we've already seen, even companies in the insurance sphere tend to have a different view of the numbers and how to interpret them. Premium calculations are done based on the values that the company has access to. Using those numbers and breaking them up into metrics that can be tracked, the company can then decide what sorts of drivers carry higher risk and which ones are less likely to be involved in an accident. Gender is one of those broad categories that has been traditionally used to break up the customer base into more refined groups, but does having a higher premium because of one's gender constitute unfairness?

Finding the Path of Least Resistance

Even with the same state, some companies offer better insurance rates for drivers than others. There are competing companies that provide better prices based on the gender of the driver, thanks to how they calculate risk. The way around this may not be banning the use of gender as a delineator, but rather looking around for the companies that best suit what you're looking for in terms of cheap auto insurance. Having a wide choice of insurers lets the client choose which package best suits their situation. It may take some research, but at the end of the day, if a company offers a better rate because of your gender, then that might be the one you want to go with.

The Source of the Discrepancy

The wildly different takes on insurance costs around the country come down to a single factor - how a particular company sees its driver statistics. Statistical analysis is one of the cornerstones of risk management, but it's not a field where one adjuster can see some data and make a solid conclusion about it. The study of risk is the study of probabilities. There is always a chance of something happening and based on a generalization of the population; an insurance adjuster can assume the amount of risk that an average client within a specific demographic would present the company. Based on that assumption, the company can then quote the client as an average. However, as we noted above, different statistics favor either one side of the gender equation or the other. Whether a company can look past that to remove gender as a rating metric or not comes back to the company itself.

What You Can Do

As it stands, if you live in a state that doesn't have a ban on gender-based quotes for insurance companies, you can either do the research and capitalize on a company offering better rates for your gender, or just avoid the gender issue altogether and get insurance from a company that doesn't consider it. Thanks to the number of companies on the market that are competing for your business, you, the consumer, have the best of all worlds. You can pick a company that offers a great priced policy that exists because you're the gender you are and make out like a bandit. Or you could vote with your wallet and choose a company that doesn't have any gender-based metrics in their risk determination. The choice is yours, ultimately. While gender does affect car insurance in the states where a ban doesn't exist, you can leverage that to your benefit, regardless of if you're a man or a woman. It just takes a little bit of research.

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