Gender Matters: Why Men Pay More for Car Insurance

People strive for gender equality in most facets of life, but in the auto insurance world, it’s a commonly known fact that men usually end up paying more. Data provided by California regulators, for example, shows men could expect to pay an average of about 13 percent more for the same coverage. Gender-based pricing differences are based on extensive statistical information that shows male drivers file more claims than female drivers. Although crash data usually comes out in a woman’s favor, gender can’t always be used to set rates.

Debates have raged for years between men and women over which sex has the best drivers. But as far as insurance companies are concerned, it’s all about numbers. Information in the National Highway Traffic Safety Administration’s 2008 National Motor Vehicle Causation Survey shows that almost 54 percent of drivers involved in automobile accidents between July 2005 and December 2007 were male.

Most insurance companies take this information very seriously when rating drivers because it influences the probability that they may have to pay out on a claim. Because insurers lose money when claims are paid, people who are at a higher accident risk are generally charged more for vehicle coverage.

Men Can Find Cheaper Rates by Shopping
The amount that a motorist is charged for car coverage is dependent on the individual company. Based on an analysis of rates given in the Auto Insurance and Shopper’s Guide provided by Kansas regulators, it’s apparent that gender-based price differences can vary significantly. Of the 28 companies that are listed, the premiums for a 21-year-old were on average 24 percent—or $204—higher when the driver is male. But at its largest, the pricing gap was 44 percent; at its lowest, it was 8 percent.

Despite the accident statistics surrounding the different genders, some insurers do not rely on this information when rating drivers and others are legally barred from using this data. A handful of states—including Massachusetts, Montana, North Carolina, Michigan, and Pennsylvania—ban the practice.

Vehicle owners’ best chance of finding affordable coverage that is priced in their favor is to shop around. Although men may encounter higher rates, generating online car insurance quotes from several sources can provide pricing options, and the possibility of finding an insurer that rates men more favorably.

The Cheapest States to Buy Auto Insurance

Almost every state requires motorists to be insured before driving, but each state has a unique range of prices for vehicle coverage. Insurance costs are dependent on many different things, like population density, crime rate, uninsured motorist percentage, required coverages, and many other facts that are unique for every location. As a result, there are some areas in the U.S. that are more affordable than others.

The average cost of vehicle coverage is likely to change every year, but several states have consistently remained among the cheapest. Data produced by the National Association of Insurance Commissioners and made available by the Insurance Information Institute show that in 2009 the typical expenditure in North Dakota was $510, which was the lowest in the country. Trailing closely behind were South Dakota and Iowa with average expenditures of $521 and $532, respectively. In comparison with a national average of $785, insurers in these states offer considerably cheaper rates.

The areas that boast some of the highest expenditures include Washington, D.C., with an average of $1,128, New Jersey at $1,101, and Louisiana at $1,099.

When comparing these two groups, there is a distinct difference in driver density. For example, North Dakota is home to over 245,000 licensed drivers occupying over 86,000 miles of public roads. In D.C., however, there are over 189,000 licensed drivers using only 1,400 miles of public roads. That means there are only 2.84 drivers per mile of public road in North Dakota, but 13.5 drivers per mile in D.C. Consequently, the accident potential in D.C. is significantly higher than in the Peace Garden State.

Driver, Coverage Options Matter When Looking for a Cheap Policy

While the area where a person lives will have an effect on rates, policy prices are also based on individual drivers. A person who lives in a state with some of the lowest coverage costs may not necessarily be able to locate inexpensive auto insurance more easily than someone living in D.C. if they have a bad driving history, have a long daily commute, are young, or have established a poor credit history; all those factors play important parts in policy pricing.

In addition to the driver’s personal details, the details of state insurance laws also contribute to pricing differences. Comparing expenditures between states is not what’s known as an “apples-to-apples” comparison, since the minimum amount of coverage required by law varies from state to state. In Alaska, for example, drivers are required to carry a total of $125,000 in liability coverage. The total liability coverage required of drivers in Ohio, on the other hand, is $32,500. That can make a big difference in coverage costs, which should drive home the necessity for consumers to consider their coverage levels and compare costs only for the same amounts of protection.

Some states, though, are exceptions that manage to maintain low average costs while having high minimums. Both Iowa and Maine are near the top the list of inexpensive states to find auto insurance, but each of these locations requires motorists to maintain different levels of protection. In Iowa, drivers only need to maintain a total of $55,000 in liability coverage to legally drive. In Maine, however, these limits are the same as Alaska’s, $125,000. Although Iowa boasts a slightly lower average expenditure, the average motorist in Maine may be significantly more prepared for an accident for only a few extra premium dollars.

Modern Technology That Can Cut Insurance Costs

Motorists around the world are in the middle of a technological renaissance focused on keeping drivers safe while they cruise the open road. But safer cars with futuristic features means more than fewer accidents and injuries behind the wheel: It can also translate into cheaper car insurance. Producers rate applicants based on their accident risk, so if people are less likely to file a claim because of highly regulated safety features, policy prices might be lower.

State and federal government has made it a priority to ensure that all vehicle owners are as safe as possible while driving. To do this, legislation has been passed that requires all new motor vehicles to be equipped with certain safety features. For example, as of Sept. 1, 2011, all new light cars must be equipped with electronic stability controls (ESC). This feature detects and reduces loss of traction to help prevent drivers from losing control of their vehicles.

Once all light vehicles on the road are equipped with ESC systems, the National Highway Traffic Safety Administration estimates (based on extensive research) that between 156,000 and 238,000 automobile accident-related injuries could be prevented annually. In addition to having ESC systems, many modern cars also contain other advanced safety features, including lane-departure warnings, forward-collision warning, advanced air-bag systems, and many other features that can significantly reduce accident risk.

New Technology Translates into Lower Insurance Rates

A vehicle owner who is surrounded by advanced safety features is better equipped to avoid car accidents than a low-tech driver. This increased level of protection can often lead to significant auto insurance saving. Often producers will give special discounts to people who insure automobiles that are equipped with technology designed to reduce collision probability and accident damage. Cars and drivers that are well protected often translates into fewer or smaller claims that companies are obligated to pay, which are savings that producers are happy to pass on to policyholders. These technologies, however, have to be proved to statistically lower crash risks before warranting a discount.

Coverage costs may also be indirectly affected by modern safety equipment. If vehicle owners are able to avoid accidents and claims, they are also likely to maintain a clean driving record. Because policy prices are largely based on claims history, a driver who avoids accidents and moving violations is more likely to make an auto insurance quote comparison that produces inexpensive results.

Before taking off to buy an expensive new car loaded with exciting equipment, drivers should check with their insurer to see how much a specific vehicle will cost to insure. Buying a new automobile almost always results in higher coverage costs because of their increased value. Luckily, as many new safety features become standard in the marketplace, it will become more and more common to find cheaper (or slightly used) automobiles that are adequately equipped to keep drivers safe on the open road.

The Three Stages of Auto Insurance Needs

As people drive down the road of life, they need auto insurance to cover their assets. But over time a person’s priorities change, and often the same policy won’t always offer the best protection. Consumers should review their policies on an annual basis, but, at the very least, there are three distinct moments when coverage needs drastically change, and drivers need to stop and shop for a new plan.

Young, First-Time Buyers: The first time that the thought of car coverage enters a person’s mind is when they get their license. Ambitions are high, assets are low, and the best insurance policy appears to be the cheapest one they can find. Unfortunately for teenagers and other inexperienced drivers, being young also translates into steeper rates. Producers base prices off of accident risk, and teens have a long history of taking unnecessary risks while behind the wheel, making automobile accidents the leading cause of death for youthful motorists in the U.S.

Many companies interpret risk differently, so by comparing car insurance policies it may be possible to find an affordable plan. Although it may be tempting to get the lowest amount of coverage necessary to legally drive, young drivers are urged to consider higher liability limits to adequately cover other people’s damages that they may cause.

Family-Friendly Motorists: When it comes time to settle down and start a family, a motorist’s priorities often take a drastic turn toward safety. Old junky cars are traded in for minivans and spacious sedans equipped with safety features designed to keep both driver and passengers safe from harm. Insurance needs change as well. Drivers start to consider purchasing umbrella policies and bumping up liability limits to better protect their assets, which are now more important than ever.

When looking for a new insurer, these shoppers should compare policies that include as much protection as possible for the lowest price. To offset the cost of more extensive protection, motorists can usually find discounts for insuring cars with advanced safety features or for belonging to certain auto clubs.

If they haven’t done so already, insured families also should merge separate auto policies into one in order to possibly save on coverage.

The Experienced Driver: Retirement and a home free of children ushers in a new set of auto insurance considerations for many people. These drivers are likely to have more assets that they need to adequately protect, but they also know what coverage they are looking for and frequently spend less time driving than younger motorists.

When shopping for coverage, drivers who are 55 and older can usually end up saving money by taking advantage of special discounts. Many states promote safer driving for mature drivers by offering rate reductions for taking a state-approved training course. They also can get discounts for having reduced mileage.

Higher Insurance Rates? Blame Rising Health Care, Car Costs

Recent negative economic trends have impacted virtually everyone in one way or another. Many people are looking for ways to decrease spending, but for vehicle owners, auto insurance is a necessary expense that unfortunately may only be increasing. An economy with rising health care costs, ballooning car costs, and a bad job market usually translates into higher coverage costs overall. If an insurer suffers greater-than-expected financial losses because of fluctuating prices in other industries and bad investment performance, these losses may be passed on to policyholders in the form of higher premiums. In addition, consumers’ eroding credit may push their individual costs upward.

When an insured motorist is involved in an accident, an insurance company is usually the one that pays for vehicle repairs. And when the cost of cars goes up, the amount that those insurers have to pay for repairs also increases. Recent information gathered by TrueCar.com places the average transaction price for a new car in April 2012 at $30,303, up 4.2 percent from April 2011. Higher vehicle value and improved technology has made modern cars increasingly expensive to repair, resulting in greater losses for coverage providers when they have to pay out on individual claims. According to the Insurance Information Institute (III), the average cost of property damage, collision, and comprehensive claims went up 17 percent, 10 percent, and 28 percent, respectively, between 2000 and 2010.

Another trend that has impacted the price of vehicle coverage is the rising cost of health care. Automobile accidents often lead to bodily injuries, which are commonly covered by insurers. Unfortunately, the Centers for Medicare & Medicaid Services have found that national health expenditures reached over $2.5 trillion in 2010, nearly twice as high as the $1.3 trillion in expenditures in 2000. Of these expenditures, hospital care accounts for over $800 million. And according to the III, bodily injury claims rose a whopping 43 percent between 2000 and 2010.

The cause of skyrocketing health care costs and the resulting car insurance premium inflations remains a heavily debated subject. Some institutions, including the Kaiser Family Foundation, accredit these price increases to a combination of technology, prescription drug, and administrative costs which have all steadily increased in recent years. If emergency medical procedures and medication costs increase, it means that policy providers may lose revenue, and motorists are charged more to compensate for this economic loss.

Personal Economic Troubles Can Mean More Expensive Coverage
Apart from changes within the insurance industry, lifestyle changes for individual motorists can also lead to higher premiums in an economic slump. When times are tough, many people are forced to turn to credit cards to cover their expenses. When drivers begin to borrow excessively, their credit scores begin to drop. In states where credit scoring is a common rating practice, a poor financial history could easily translate into a higher priced policy.

To counter the rising price of coverage, one of the best actions that a motorist can take is to shop around to find one of the top insurance companies that are willing to provide adequately priced protection. Although there isn’t much that a motorist can do to impact industrywide changes, drivers are still capable of exploring all of their options to find cheaper alternatives.

When CA Cell Phone Violations Can Impact Insurance Rates

Driving and using a cell phone are two actions that don’t mix well. Research from Carnegie Mellon University suggests that using a cell phone while behind the wheel can reduce brain activity associated with operating a motor vehicle by as much as 37 percent. Nationwide, over 3,000 people were killed as a result of automobile accidents involving a distracted driver in 2010. With these statistics, it’s no wonder why it’s against the law to use a hand-held phone while operating a motor vehicle in California.

In the Golden State, using a cellular device while driving can get you a ticket, but it is not considered a moving violation, so it shouldn’t appear on a person’s record. Consequently, auto insurance companies won’t be notified of the offense, so policyholders shouldn’t suffer any surcharges as a direct result of the ticket.

There is one scenario where such a ticket could affect premiums indirectly, though. After receiving a traffic ticket, California motorists are required to either pay their fine or appear in court. Failing to do either of these could cause the Department of Motor Vehicles to suspend the offending resident’s driver’s license. Although a cell phone violation will not impact a person’s driving record, a license suspension will. Coverage providers are likely to take notice of this offense and charge more for vehicle coverage. With a blemished record, making a car insurance comparison is likely to produce higher priced policies.

In the near future, cell phone violations may directly impact a person’s driving record and how much they pay for insurance. As of March 2012, California Senate Bill 1310 is making its way through the legal system. If passed, motorists who are caught using a wireless telephone while behind the wheel would be assessed a point on their record for their second violation and any subsequent convictions, which insurers would likely be able to see.

Fines and Higher Coverage Costs from Distracted Driving
If someone is caught driving in the Golden State while texting or talking on a phone without the use of a hands-free device, they could be ticketed and fined up to $20 for the first offense and $50 for any subsequent offenses. Motorists may think that this is a fairly small sum, but offenders usually end up paying considerably more in additional fees and court costs. In many cities, these fees will result in a minimum fine of $159 for first-time offenses, and $279 for subsequent ones.

Motorists in the Golden State may be tempted to use their phone or wireless device to talk to friends or find parking in Los Angeles, but distracted driving can have serious consequences. Apart from the obvious accident risks, the possibility of paying a significantly higher car insurance premium should be enough incentive to either purchase a hands-free device, or avoid talking while behind the wheel altogether.

Four Unexpected Reasons Why Your Premium Could Climb

A motorist has shopped around, explored all options, and purchased the right auto insurance policy at a reasonable price. But over the years, premiums begin to climb for no apparent reason. Here are a few developments aside from getting tickets or accidents that might unexpectedly boost premiums:

Your Kid Reaches Driving Age: Insurance companies are always on the lookout for potential reasons why policyholders would file a claim. And for a coverage provider, there’s no greater threat than a teenager learning to drive. Accident statistics for younger motorists are notoriously bad. Despite advancements in technology and safer vehicles, automobile accidents remain the leading cause of death for teens 19 and under. As a result, the moment an insured driver’s child hits legal driving age, their rates may go up.

Your Credit Heads South: Credit score represents a person’s ability to honor a debt, but to some insurers, it also represents accident potential. Some companies say claims data show there is a correlation between the number of insurance claims that drivers file and their financial background. This has lead to a process called credit scoring, which is considered controversial by many drivers. Although fairly common, states like Ohio have placed limitations on how financial information can be used when underwriting drivers.

You Buy a Nicer Car: A motorist works hard and saves his dollars to buy his dream car, only to find out insurance rates have skyrocketed. The truth is the automobile that a person insures plays a major role in how much someone pays for protection. An expensive sports car, designed to look great and go fast, is likely more expensive to repair or replace than a humble sedan, and most likely a lot less safe. For insurers, this means a bigger loss if the insured driver is involved in an accident. To compensate for the additional risk, premiums are increased.

Your Insurer Takes a Hit: When someone’s coverage provider suffers heavy financial loss, the expense is usually passed on to policyholders in the form of higher prices. A high number of claims, lawsuits, or just bad investments can all mean lower revenue. Also, a company that is deep in debt is unlikely to offer cheap insurance rates to new customers. Before buying a policy, people are encouraged to investigate an insurer’s credit and investment history, and avoid purchasing a plan from a company on the verge of bankruptcy. Taking the time to do a little research could end up paying off in the long run.