Quantifying the Sex-Based Pricing Gap in Car Insurance

Pie charts showing gender-based pricing practices for drivers of different ages

Men may like to think that they're the best drivers on the road, but it's common knowledge within car insurance companies that they tend to take more risks behind the wheel than women and end up getting into more accidents as a result. What does that mean for the average cost of their auto insurance coverage? Well, riskier drivers are more likely to make bodily injury and property damage claims. To counter the payout cost, insurance companies need to have higher premiums, so men have a higher average car insurance cost.

We wanted to quantify the auto insurance cost gap between men and women, so we looked at almost 5,000 quotes provided by insurance regulatory agencies in seven states (Texas, Iowa, Ohio, Kansas, California, Oklahoma, and West Virginia) to see which gender gets charged more for the same coverage, how often it happens, and how big the average price difference is.

The data showed women were quoted less for coverage most of the time, and the difference in their insurance premiums was often sizable.

Men Were Quoted Higher Prices 62 Percent of the Time

The analysis showed that insurance companies quoted men higher rates 62 percent of the time. And when men were quoted more for coverage, they generally weren't charged just a little more. They were charged a lot more. The average car insurance premiums for a male versus a female was $471 more a year. That amounts to a 23 percent average surcharge - more than a speeding ticket will usually raise your rates!

These differences weren't the result of the male drivers' having a bad driving record, higher annual mileage, lower credit scores, or any other negative factors that could account for drastic differences from their female counterparts. All of the quote pairs were made up of two people with the exact same motorist profiles with the only difference being the gender of the driver. In each male/female comparison, both drivers were the same age, same marital status, drove the same vehicle, lived in the same area, had the same driving history, put in the same annual mileage, and were buying the same coverage.

But men weren't always quoted higher prices for coverage. About 11 percent of the time, the insurer actually quoted the female motorist a higher rate. However, when the female was quoted more, the difference in cost was much smaller than when men saw the higher quote. In the cases where women were quoted a higher price, the average difference was only $98 a year - an average surcharge of 5 percent.

In a little more than a quarter of the quote pairs, the insurer employed gender-neutral pricing where the male and female were quoted the exact same price. This happened 27 percent of the time.

Bar chart showing distribution of premium differences when men and women were quoted different coverage prices

Gender-Based Pricing Trends Depend on Age of Drivers

The results were far from being uniform across all age groups.

The data indicate that, on average, gender-based price differences are most prominent when drivers are younger, fade between the ages of 25 and 65, and come back into play for drivers 65 and over.

Something else to note is the size of the difference for each of these age categories. For the under-25 crowd, the average car insurance was $676 a year more for males. For the 25-65 group, it was only $32.

First, let's look at the youngest age group. The comparison of quotes for drivers 25 and under showed that young men are almost always quoted more than young women for coverage. Men under 25 were asked to pay more than women of the same age almost 96 percent of the time. Prices for both young men and young women were the same under 1 percent of the time, and young women were asked to pay more about 3.5 percent of the time.

Now contrast that with the cost for drivers between the ages of 25 and 65. When comparing quotes for this age group, insurers most often quoted men and women the same price for coverage; this happened 44 percent of the time. Insurers quoted men in this age group a higher price 39 percent of the time, and they quoted women higher prices than men 17 percent of the time.

For the 65-and-older crowd, males' prices went back up a little. They saw higher prices than women 55 percent of the time. Women 65 and over saw higher prices 11 percent of the time, and gender wasn't a factor in 34 percent of the cases for this age group.

The data backs the car insurance companies’ premiums. Statistics agree that teenage boys are three times as likely to be involved in fatal crashes as their female counterparts, and even more so when other teens are riding in their car.

Image showing men's and women's likelihoods of getting into a crash

Why the Differences in Pricing?

While men may chauvinistically assume that they're better drivers, national crash statistics appear to tell a different story.

In 2010, for example, men were involved in 1.25 million more crashes than women, according to federal crash data. That's despite the fact that there were significantly more licensed women than men that year.

The average man had a 1-in-19 chance of getting into a police-reported crash in 2010. The average woman, meanwhile, had a 1-in-25.5 chance.

And the numbers look even worse for males when the focus is on fatal crashes. The average man had about a 1-in-3,280 chance of being involved in a crash of that kind. The average woman's chances were 1 in 8,985.

Why do men have higher crash rates?

One factor may be the difference in how often men and women drive. Less time on the road means fewer chances to get into an at-fault accident, and women do tend to report putting in fewer miles behind the wheel. In 2009, the average male drove about 1.5 times as much as the average woman, according to the most recent National Household Travel Survey conducted by the Federal Highway Administration.

Men have also been found to take more risks while driving than women. They are more likely to engage in distracted driving, as well as driving while fatigued. One study found that men get cited for not wearing a seatbelt, driving recklessly, and driving drunk at a rate that's more than three times higher than women. In the 2008 study by Quality Planning, women were also found 27 percent less likely than men to be deemed responsible for an accident.

"This again underscores the finding that women are on average less aggressive and more law-abiding drivers — attributes that also translate to fewer accidents," the company, which helps insurers find flaws in their rating systems, said about the findings.

"And because men are also more likely to have traffic violations for speeding, passing, and yielding, the resulting accidents caused by men lead to more expensive claims than those caused by women," Quality Planning president Raj Bhat said in a statement about the study.

Year Women's involvement rate Men's involvement rate % difference between men's and women's involvement rates
1995 5,271 8,147 +54.5%
2000 4,737 7,092 +49%
2005 4,434 6,222 +40%
2010 3,911 5,168 +32%

The Upside

The good news for men is that, if national accident statistics are an accurate indication, the gender-based pricing gap may be shrinking.

Back in 1988, men were 62 percent more likely to be involved in a motor vehicle accident than women, according to federal crash data. But that gap has been closing pretty consistently ever since. By the year 2000, men's crash rates had fallen to be 49 percent higher than women's. And the most recent data show that men's crash involvement rate is now just about 32 percent higher than women's.

Luckily, vehicle crash rates as a whole have fallen considerably over the past few decades, which means roads are getting safer. Of course, you should still keep an insurance policy that lets you feel secure.

The Ethics of Gender-Based Pricing

As of Dec. 21, 2012, insurers in the European Union will be banned from taking a policyholders' gender into account when determining how much to charge them for coverage. The change was set into motion when the Court of Justice of the European Union ruled in a high-level case that "different insurance premiums for men and women constitute sex discrimination."

In a statement about the ruling, the EU's justice commissioner cited a decades-old U.S. Supreme Court decision that ruled the Civil Rights Act of 1964 prohibited "different treatment of insured persons on the basis of their sex in connection with pension funds." The mention was ironic, considering that most states in the U.S. allow auto insurers to use gender as a factor in determining how much to charge an individual for coverage. But some states have taken measures similar to the EU and have banned gender as a rating factor for auto insurance. They include California, Hawaii, Montana, Massachusetts, Michigan, North Carolina, and Pennsylvania.

What does it mean for policy holders in these state? While it’s good news for teenage males, teenage females are getting a raw deal. Since the average car insurance rates for a teenage boy are $500 more than the average cost for teen girls, insurance companies are splitting the difference.

According to one industry expert, the U.S. is unlikely to take action similar to the EU on a national level. That's because insurers in the U.S. are usually allowed to use rating factors if they correlate with the actual risk posed by the policyholder, even if they're controversial.

Insurance companies find other ways to set rates

As gender is being used less to determine premiums, Insurance companies are exploring other avenues to assess risk. As of January, life Insurance policies can already take into account social media posts when setting rates, so long as they can prove it’s not discrimination. Insurance companies have been looking for things as benign as typos and to more obvious health-related things like pictures of smoking or drinking when deciding on the cost of the death benefit.

Car Insurance companies are exploring this avenue, as well. Theoretically, they could use your social media posts to determine if you are using your phone while driving, lying about your address, or if you have divorced and haven’t yet updated this information on your insurance policy. In practice, insurance claims investigators have used social media to combat insurance fraud. The best way to keep your insurance policy from changing due to social media is to set everything to private and turn off your geotags.

The bottom line

Whoever you are, shopping for coverage can be complicated. There are a lot of other factors that can have significant effects on your monthly rates besides gender and age. But now that you can comparison shop online, you can decide whether you want to stick with liability coverage or want to upgrade to collision and comprehensive coverage. Once you know what policy you need, you can find out who has the best insurance premiums for you, all from your house!

Note on methodology:

A total of 4,970 sample quotes were taken from the following online documents: compared the male/female quote pairs to determine the pricing difference for each.