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BANNED: Using Gender to Calculate Auto Insurance Rates

February 11, 2019
auto insurance

CALIFORNIA – Following in six other states’ footsteps, California just became the seventh state to ban auto insurers from using gender as a factor to calculate insurance rates for customers. The decision was put into effect on the first of January. This occurred because regulators and lawmakers increased pressure on insurers to focus their costs more on behaviors in driving than in gender and other unrelated criteria. So, what does this mean for drivers?

Simply put – your gender won’t impact your auto insurance any more. Interestingly, this could mean lesser insurance premiums for young male drivers. Statistically, these drivers are riskier to insure. Over the years, the statistics have shown that these drivers tend to get in more accidents or have other issues on the road. On the other side, young female drivers statistically are less risky to insure – but now, they will likely pay more. The numbers before the decision? On average, male teenagers cost about $7,400 to insure, whereas female teens cost an average of $6,900.

Now, other factors will be a bigger influence in the cost of insurance. For example – insurers plan to essentially punish drivers more for things like distracted driving. So, if you get a ticket for distracted driving, your insurance premium could go up by almost 20%, whereas a few years ago it would only be about 2%.

The Rise in Insurance Premiums

It is unclear exactly the reason, but insurance premiums have been jumping up throughout the country. As Alyssa Connolly, Zebra’s director of market research, stated: “It’s the highest it’s ever been nationally. Rates are up this year for 83 percent of Americans. And it’s erratic.”

It’s hard to say why rates have gone up, but there are a few guesses. The use of smartphones and other technological distractions are increasingly the cause of accidents across the country, which could have something to do with it. Additionally, some researchers noticed that insurance premiums have risen in states that recently legalized marijuana.

However, gender is no longer one of those factors. The differences, if any, between genders driving usually only exist at younger ages. Other states are beginning to ban insurers from using other supposedly irrelevant factors in the decision making as well. These include things like educational status, marital status, or credit scores.

It is hard to say exactly how the auto insurance industry will change throughout the year for other states in the nation. Will gender no longer be a factor throughout the country?

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