Women Pay More for Car Insurance, Studies Find

Auto insurance is based on risk, so you would think that since men have more accidents, they would pay higher rates. But in fact, a study by the Consumer Federation of America (CFA) finds that women pay more, at least in Delaware, where the study was conducted. Similar studies elsewhere confirm the finding.

“Today’s report will be eye-opening for many consumers as they see major insurers charging higher premiums based on gender. We’re making progress towards gender equity, but systemic disparities continue to be found in unexpected areas of our lives,” said Trinidad Navarro, the Delaware Insurance Commissioner. “The good news is that we can fix this – several other states have already removed gender as a pricing factor. It’s time we do the same.”

The data used in the study shows that many women are being charged more by auto insurers based solely on their gender, with several major companies’ differentials around 8-9%. While there are more female drivers on the road, state data shows that men are involved in more accidents. Navarro said he is working with the General Assembly to end the rating practice.

Though CFA’s study only covered Delaware, similar findings have been reported in other states. A study by The Zebra, an insurance information site, earlier this year found that nationwide, women pay an average of 0.4% more than men for car insurance. And in 21 states and the District of Columbia, women are paying more despite getting into fewer accidents, The Zebra finds.

The Insurance Information Institute – an industry group – says that, in general, rates should be set by a driver’s record, mileage driven per year and the location where the car is kept.

But The Zebra found that, in reality:

• Women can pay up to 7.6% more than men, depending on their age and location.
• Men are riskier drivers and file more claims than women, but women are 37-73% more prone to injury in car accidents.
• Seven states now ban gender as a rating factor in car insurance.

Car insurance is a necessity

The report outlines the economic necessity of auto insurance, the heightened financial disadvantage of individuals experiencing cost disparities, and identifies gender’s inadequate correlation to risk. Six states – California, Hawaii, Massachusetts, Michigan, North Carolina, and Pennsylvania – have already eliminated the potential for gender-based pricing disparities.

“Despite the concerning data in this report, now is not the time to call your agent and change insurers – now is the time to call your legislator. We must solve this issue for every person, and your advocacy can help make that happen,” said Navarro.

On the other hand, consumers upset about their insurance rate can easily get quotes from competing companies. It’s also worth considering a usage-based company, which may iron out any gender disparities.

“Having a method of transportation is key to much of our daily lives, whether it’s getting to and from work, or being able to shop for necessities. Residents are required to purchase auto insurance both to drive legally, and to access our economy,” said Delaware House Majority Leader Valerie Longhurst. “It’s critical that the system by which consumers’ premiums are set does not create different outcomes based on gender identity, especially when so many people already face persistent systemic and financial disadvantages, including the wage gap.”

Problem is widespread

“Many auto insurers are charging women with perfect driving records higher premiums simply because of their gender,” said Douglas Heller, Director of Insurance at CFA.

“While most people think auto insurance pricing favors women, our research confirms other recent studies demonstrating that, on average, women pay more. Delaware requires that every driver buy insurance, so lawmakers should act to prohibit the gender surcharge many companies impose on their female customers,” Heller said.