Lisa Green, NERDWALLET.COM
April 5, 2019
Your driving record may be flawless.
Your car may be one of the safest on the road. But, in most states, you might pay more for car insurance than an all-but-identical driver, simply because of your gender.
“The best thing you can do is to shop for insurance,” says James Lynch, chief actuary for the Insurance Information Institute. “Different companies have very different rates, and you can get a good deal by shopping around.”
Who pays moreft
Insurers analyze many factors, including driving records and demographics, to decide which drivers are more likely to have accidents and therefore should pay more. They’re required to justify their rates to state regulators.
In Hawaii, Massachusetts, Montana, North Carolina, Pennsylvania, parts of Michigan and, as of this year, California, insurers can’t use gender as a factor. Elsewhere, the approach to gender varies widely.
“Until the last few years, men always paid more,” says Robert Hunter, director of insurance for the Consumer Federation of America.
But in 2017 the group found most large car insurance companies often charge 40-and 60-year-oldwomen more than their male counterparts.
The research, which priced basic liability insurance from six insurers in 10 cities, also found widespread inconsistencies. For example, Allstate quoted higher rates for 40-year-oldwomenin Baltimore and higher rates for their male counterparts in Tampa, Florida, according to the data. For 20-year-olds in Cleveland, Farmers Insurance showed higher quotes for men while Geico had higher quotes for women.
But gender-based price differences were dwarfed by overall price differences among companies.
So a woman might save hundreds of dollars a year with the cheapest insurer in her area-even if that insurer would charge her male counterpart less.
What drivers can do
“If you want a company that doesn’t use gender [in setting rates], have that conversation with your agent or company,” says Nicole Ganley, spokeswoman at the American Property Casualty Insurance Association. “And shop around, because there’s a lot of choices out there.” Some advice for shoppers:
· Get quotes from multiple companies to ensure you find your best deal.
· Request a price match. Presented with a competitor’s quote, your insurer may offer a lower rate, Hunter says.
· Be willing to change companies.
Is it fair?
“It is no more fair to base auto insurance rates on gender than it is on race or hair color,” says Carmen Balber, executive director of the advocacy group Consumer Watchdog.
The Insurance Information Institute’s Lynch, however, contends it’s unfair for safe drivers to pay as much as risky ones.
Hunter questions the actuarial basis for some differences. How can various insurers simultaneously prove to regulators that men are safer drivers, that women are safer and that both genders are equal?
Lawrence Cranor, actuary for Columbia, Missouri-based Shelter Insurance, says the contradiction is understandable: Insurers use different data, so they see different pictures of risk.
“We’re probably all a little wrong,” he says, “but we’re all trying to estimate something that really is unknowable.”