Jeffrey Wade
Gender is one of many factors that auto insurance companies use to determine insurance rates. In most states, males pay more than females during their teenage and young adult years, as they are statistically more likely to get into accidents, get tickets, and be arrested for driving under the influence. However, this gender-based pricing advantage for young women disappears around the age of 25, and the discrepancy even moves in favour of men when comparing insurance premiums for older people.
| Characteristics | Values |
|---|---|
| Number of states that allow gender to be used as a factor in pricing | 42 states and Washington, D.C. |
| Number of states that ban the use of gender when determining car insurance premiums | 7 |
| Average amount women pay less than men for car insurance | $85 |
| Average amount men pay for car insurance annually | $1,323 |
| Average amount women pay for car insurance annually | $1,211 |
| Average amount 20-year-old men pay more than women of the same age | $400 |
| Average amount 16-year-old males pay more than their female counterparts | $843 |
What You'll Learn
Gender-based pricing
The impact of gender on insurance rates is most noticeable among younger drivers and tends to vary by state. While some states prohibit the use of gender in calculating premiums, others allow it but require it to be supported by relevant data or actuarial principles.
The rationale behind gender-based pricing lies in the statistical differences between male and female drivers. According to data from the National Highway Traffic Safety Administration, men are involved in a higher proportion of car crashes, including fatal crashes, and exhibit more harmful driving behaviours such as driving under the influence, speeding, and distracted driving. As a result, insurance companies consider male drivers to be a higher risk and charge them higher premiums to protect themselves against potential claims.
On average, men pay about $1,323 for car insurance annually, while women pay approximately $1,211, a difference of 9%. This disparity is most significant among young drivers, with 20-year-old men paying around $400 to $800 more per year than their female counterparts. However, as drivers age, the gender gap in insurance rates narrows, and in some age groups, women may even pay slightly more.
It is important to note that gender is not the only factor that determines insurance rates. Other factors, such as age, marital status, location, driving record, type of car, and credit score, also play a significant role in calculating insurance premiums.
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Statistical risk factors
Crash Statistics: According to the National Highway Traffic Safety Administration's Fatality Analysis Reporting System (FARS), in 2020, men were involved in 56% of all car crashes, while women were involved in 44%. This disparity is even more pronounced in fatal crashes, with 68% of male drivers involved compared to 32% of female drivers. This data indicates that male drivers are statistically more likely to be involved in car accidents, particularly those that result in fatalities.
Driving Under the Influence (DUI): Men are more likely to drive under the influence of alcohol or other substances, leading to higher rates of DUI and DWI convictions. In crashes where a driver had a blood alcohol concentration (BAC) above the legal limit, men were involved 68% of the time, while women accounted for 29%. This suggests that male drivers pose a higher risk in terms of impaired driving.
Speeding: Out of all car accidents involving speeding in 2020, men were responsible for 60%, compared to 40% for women. This trend is also evident in fatal crashes, where the ratio of male-to-female involvement was seven to three. Speeding is a significant risk factor, and the data indicates that men are more prone to this dangerous driving behaviour.
Distracted Driving: Distracted driving is another critical factor, with men involved in 66% of fatal crashes where distraction was a factor, compared to 34% for women. This suggests that male drivers are more likely to engage in behaviours that take their attention away from the road, increasing the risk of accidents.
Drowsy Driving: Men were involved in 69% of fatal crashes related to drowsy driving, while women accounted for only 30%. This indicates that male drivers are more likely to operate vehicles while fatigued, which can impair their judgement and reaction time, leading to higher accident risks.
Overall Accident and Claim History: Statistical data shows that men, on average, have higher rates of car crashes, incidents of driving under the influence, and other harmful driving behaviours. Consequently, they are more likely to file insurance claims. This information is crucial for insurance companies when assessing the likelihood of future claims and setting premium rates accordingly.
While these statistical risk factors play a role in insurance rate determination, it's important to acknowledge that individual driving records, claims history, and other factors also significantly influence insurance rates. Additionally, recent studies have found disparities in insurance rates between men and women, with some states and companies charging women higher premiums. As a result, the role of gender in setting insurance rates is evolving, with a growing number of states banning the use of gender as a rating factor.
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Transgender and nonbinary policyholders
Selecting a gender on a car insurance application can be challenging for transgender and nonbinary people. While the process of buying auto insurance is similar for everyone, transgender and nonbinary people may benefit from seeking out insurance agents and companies that understand their unique needs and challenges.
How Gender Affects Car Insurance Applications
In most U.S. states, men pay more for car insurance than women. This is because male drivers have higher rates of car crashes, incidents of driving under the influence, and other harmful driving behaviours. However, it's important to note that the impact of gender on insurance rates varies by state, and some states don't allow the use of gender in calculating premiums at all.
Insurance companies might ask for sex at birth, require gender to match your driver's license, or let you choose the gender you identify with. This inconsistency can be challenging for transgender and nonbinary people.
There is little data on how insurers determine rates for transgender and nonbinary policyholders. In some cases, transitioning may result in higher insurance rates. However, if you have a good driving record and are older than 25, the increase may not be substantial.
To obtain car insurance as a transgender or nonbinary person, you can follow these steps:
- Shop around for quotes from multiple insurers and compare rates, coverages, optional coverages, and discounts.
- Find out which coverages are required by your state. You may also need additional protections for financed or leased vehicles.
- Ask insurance agents if their company uses gender as a rating factor, and provide honest answers to their questions about your driving record and claims history.
- Seek out insurance agents and companies that are LGBTQ-friendly and have LGBTQ-inclusive policies. You can start by checking state and local LGBTQ chambers of commerce and the Human Rights Campaign's Corporate Equality Index.
Changing Your Gender on Your Car Insurance Policy
If you need to change the gender on your car insurance policy, you will likely need to change it on your driver's license first. The process for changing your gender on your driver's license varies by state, and some states require proof of gender confirmation surgery or a court order.
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State-by-state variations
The use of gender as a factor in setting auto insurance rates varies across states. While most states allow insurance companies to use gender as a factor in determining auto insurance rates, some states have banned the practice, citing gender-based discrimination. These states include California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania. Montana was the first state to ban gender-based insurance rates in 1985, but the law was changed in 2021 to allow gender to be used in auto insurance ratings again.
The impact of gender on auto insurance rates also varies by state. For example, in Florida, women pay $85 more per year than men, while in Oklahoma City, a woman driver may be quoted only 3% higher than her male counterpart.
In addition to banning the use of gender, some states have also prohibited the use of other factors such as educational status, marital status, or credit scores in setting auto insurance rates.
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Gender-neutral options
While gender-neutral options are not yet standard across the auto insurance industry, some states and companies are leading the way in this area.
States with gender-neutral options
Several U.S. states are ahead of the curve when it comes to recognising non-binary gender identities on official documents, and some have also banned insurance companies from using gender as a rating factor. These states include California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania.
The District of Columbia is also worth noting, as it is one of 22 states that allow drivers to choose male, female, or non-binary gender markers on their driver's licenses.
Insurance companies with gender-neutral options
Some insurance companies have discontinued the practice of using gender as a rating factor. These include State Farm, Shelter Insurance, and Auto-Owners.
Other companies, such as Progressive, have been found to charge non-binary drivers an intermediate amount between male and female rates.
How to find gender-neutral options
When looking for gender-neutral insurance options, it is worth seeking out insurance agents and companies that understand the unique needs of transgender and non-binary people. LGBTQ chambers of commerce often offer directories of LGBTQ-friendly companies on their websites.
It is also worth looking for insurance providers that rank highly as an LGBTQ employer. The Human Rights Campaign publishes an annual Corporate Equality Index, listing companies with the best LGBTQ-inclusive workplace policies, benefits, and practices.
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Frequently asked questions
Auto insurers use gender as one of many factors to calculate insurance rates. Male drivers are statistically more likely to get into accidents and exhibit dangerous driving behaviours, so they are considered higher-risk and charged higher premiums.
The difference in rates between men and women varies by age and state. Men typically pay more than women, especially during their teens and early adulthood. However, the gap narrows as drivers get older, and in some age groups, women may pay slightly more.
California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania have banned the use of gender when determining car insurance premiums.
In addition to gender, insurance companies consider factors such as age, marital status, location, driving record, type of car, credit score, and mileage. These factors can have a more significant impact on your insurance rates than gender.
