How Age Affects Car Insurance Rates
Heres the bottom line: Young drivers pay more for car insurance than any other demographic and with good reason. According to the U.S. Centers for Disease Control and Prevention, crash rates per mile driven for 16- to 19-year-olds are three times higher than those of older drivers. Thats why its important to get multiple car insurance quotes when shopping for teenage driver coverage.
According to Mike Barry, spokesman for the nonprofit Insurance Information Institute, younger drivers also file more car insurance claims than those with more experience behind the wheel, which is what accounts for the significant differences in premium price tags.
For example, according to the study, a 25-year-old single male will pay an average of 49 percent less for car insurance than a 20-year-old single male driver.
This comes as no surprise to anyone in the insurance industry, says Barry. Certain demographics, like young, single men, are going to pay more for auto insurance because history shows that they are more likely to file a claim and that theyre more expensive to insure. Its not until they get some experience under their belts and have a clean driving record that rates start to drop.
Men arent the only ones whose premiums are affected by age. According to the study, a 25-year-old single female driver will pay an average of 39 percent less for auto insurance than a 20-year-old single female driver.
Mythbusting: Why Are Women Paying More Than Men For Car Insurance
Conventional wisdom usually dictates that, all else being equal, women pay less for car insurance premiums than men because theyre inherently safer drivers. To be sure, the National Highway Traffic Safety Administration confirms that male drivers cause 6.1 million accidents annually, while women are at fault in 4.4 million crashes per year.
Yet women are actually more likely to pay higher rates than their male counterparts, according to research just completed by the Consumer Federation of America , an association of more than 250 non-profit consumer groups.
Specifically, the CFA found that 40- and 60-year-old women with perfect driving records pay more for basic coverage nearly twice as often as men having equivalent histories. And while the study confirmed that women in their 20s indeed typically pay less than their hormone-enraged male counterparts for essential coverage, the CFA nonetheless discovered that GEICO regularly charges young female motorists higher premiums in nine of 10 big cities. Every state in the union except for New Hampshire requires all drivers to carry at least minimal liability coverage.
The CFAs study was based on 165 pairs of online quotes issued for both male and female drivers at ages 20, 40, and 60 years old, living in 10 major U.S. metropolitan areas, and obtained from the nations six largest carriersAllstate, Farmers, GEICO, Liberty Mutual, Progressive, and State Farm.
All Things Are Not Equal
Do the differences NerdWallet found mean that women actually end up paying more than men in later years? Not necessarily.
At all ages, men continue to get into more accidents, leading to more claims and rate increases. They also have more blemishes on their driving records. Men received 58.5% of traffic-stop tickets in 2011, according to the Bureau of Justice Statistics.
And three times as many men were arrested for DUI in 2012, according to the FBI, although the gap is narrowing.
Finally, men drive more than one and a half times as much as women, on average, and more than twice as much as women starting at age 55, according to the Federal Highway Administration.
So the average man may very well get higher car insurance quotes than the average woman, because mens and womens records are not the same.
Ultimately, car insurance quotes are largely about factors you control, such as what kind of car you drive, what you use it for and how safely you drive.
Are you paying more than necessary? NerdWallets car insurance estimator tool can help you find out.
Aubrey Cohen is a staff writer covering insurance and investing for NerdWallet. Follow him on Twitter and on .
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How Gender Affects Auto Insurance Rates
The Effect of Gender on Car Insurance Rates
Car insurance companies take a look at many factors to determine how much risk they’ll face when insuring you . These include:
- Your car’s make, model, and year.
- Your credit history.
- Your age.
In addition to the above, a major factor that gets weighed when an auto insurance carrier determines your rates is your gender. This is given particular attention when you are a very young driver .
How Does Adding One Accident To Your Record Affect Rates
Next, lets analyze how an accident affects car insurance premiums for both men and women.
For full coverage, women will see a jump from $1,551 to $2,125, which is a 37% increase in cost. Rates for men raise from an average of $1,558 to $2,133 . With an accident on record, the difference between male and female insurance rates decreases from .51% to .38% so if it were a race, it would essentially be the equivalent of a photo finish.
For minimum liability, the average rate for females changes from $551 to $810, which is a 47% increase. Averages for males also increased about 47%, from $540 to $795, almost entirely eliminating the disparity between genders for rates.
Across the board, the significant factor is more often the type of coverage you have and the specific incident that affects your rates, more so than gender.
After one speeding ticket, rates go up
Note: although speeding tickets and accidents do not necessarily reflect a difference between male and female rates relative to each other, they can increase your policy overall and that amount can vary from the percentages indicated in the chart above.
Repayments And Imputed Interest
When you lease a passenger vehicle, you may have a repayment owing to you, or you may have imputed interest. If so, you will not be able to use the chart.
Imputed interest is interest that would be owing to you if interest were paid on the money you deposited to lease a passenger vehicle. Calculate imputed interest for leasing costs on a passenger vehicle only if all of the following apply:
- one or more deposits were made for the leased passenger vehicle
- one or more deposits are refundable
- the total of the deposits is more than $1,000
Drivers Aged 25 To 30
Car insurance decreases at 25 and steadily decreases until drivers turn 65, but the five years between 25 and 30 are formidable years for the auto insurance industry. During those years, people tend to get married and settle down both in their personal life and their driving habits.
During those years, drivers typically have 10-plus years of experience on the road, allowing their brains to develop through a multitude of driving situations. Theyre more in control and aware of the external driving factors at hand, so theyre much less likely to speed or get in serious accidents.
When people get married, they tend to be more conservative in their driving. They combine auto insurance policies, which gives them a greater discount over those with a single person on the policy.
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Age Affects The Insurance Cost Gap Between Genders
While adult men and women pay about the same amount for car insurance, the gap changes as drivers get older.
While all teens pay more for car insurance than older adults, teenage boys pay the most of all. Our sample boy driver got a quote for $4,946 per year, or $328 more than a girl of the same age.
On the other hand, a 32-year-old man can expect to pay about $15 more per year than a woman.
Why Women Pay Less For Car Insurance
Auto insurance companies calculate their risk when they determine your premium.
Calculating risk means using historical data to make an educated estimate of the likelihood of a covered person being in an accident.
The statistics tend to show that as a group, women are less likely to:
- Get into a car accident.
- Commit moving violations, like speeding and driving under the influence .
- Buy cars that are more costly to insure.
- Drive as many miles as the average male driver.
For the reasons above, car insurance for women is typically cheaper than it is for men.
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Registering A Vehicle On Behalf Of Someone Else
If you cant go to a registry office, another person can apply for a vehicle registration, renewal, cancellation or transfer on your behalf. The person requesting the service on your behalf must bring:
- your proof of ownership document, proof of valid insurance, and their ID
- a completed form, signed by you
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Selecting The Wrong Engine
Todays trucks offer everything from surprisingly efficient 4-cylinder gas engines to 8-cylinder diesel behemoths, but picking incorrectly can saddle you with either an excess sticker price and fuel costs or too low a cargo and towing capacity.
For example, consumers who buy a Ford F-150 XLT can pay $31,320 and get a 283-horsepower V-6 engine that can tow 7,600 pounds, or they can spend $32,115 for a 365-horsepower turbocharged V-6 that can handle 12,200 pounds.
Again, Brauer says smart shoppers will honestly consider how much cargo capacity they need and buy accordingly.
The rule of thumb is that you can probably get away with one of the smaller engines if you rarely tow or carry more than 500 pounds, he says. But if you plan to tow 2,000, 3,000, 5,000 pounds or more on a trailer, youll want to go for the middle- or upper-range of available engine power.
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Study: Women In Washington State Pay More For Car Insurance
SEATTLE A study released Tuesday by “The Zebra,” an insurance comparison site, reports women on average pay more for car insurance than men.
The Zebra compared car insurance rates for all 50 states and learned women in Oregon, Washington, Minnesota, Louisiana and Utah pay more for car insurance compared to men. For women in Oregon, the average annual difference was found to be $78 and in Washington, $58.
“While teenage boys pay more and are more dangerous drivers than teenage girls, middle-aged women pay more but are less dangerous drivers than middle-aged men,” according to The Zebra.
The study looked at data from the Insurance Institute for Highway Safety and learned while men are riskier drivers, women are 37-73% likelier to be seriously injured.
The Zebra’s data shows there are 23 states where men pay more for car insurance, but margins are smaller. In Wyoming men on average pay $47 more. Wyoming is followed by Vermont and Texas at $36.
There are also seven states where gender is banned as a rating factor.
There are additional factors that range from state to state. Credit score, type of vehicle and age can all impact car insurance rates. The three standard metrics are a person’s driving record, location and amount of time driving.
The study said its data should raise a question for state governments: If the price women pay for car insurance doesnt reflect their level of risk compared to men, should gender be banned as a rating factor?
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How Do The Major Players Stack Up
Interestingly, the five largest insurance providers demonstrate a noticeable spread in terms of gendered pricing gaps. State Farm Insurance, one of the companies without a male penalty, is also the cheapest of the major insurers in 28 statesmore than the next two largest providers combined. However, a male driver with both a clean record and a premium from Progressive Insurance or Farmers Insurance could opt for user-based insurance to avoid some or all of this gender gap. By agreeing to install a telematics system in their car to monitor day-to-day driving patterns including the time the vehicle is in use, speed, and driving behavior, motorists can have the cost of their premium based on their personal driving risk and not on their gender.
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Save On Insurance No Matter Your Gender
Whether you’re male, female or nonbinary, if you’re having trouble finding an affordable price for car insurance, there are several ways for you to bring down your monthly rate.
First, shop around. Every car insurer sets rates differently, and a factor like a speeding ticket might have a smaller impact on your rates at one company than another. We recommend shopping for car insurance at least every two years, or any time you experience a life change that could impact your rates.
Second, maximize how many discounts you’re eligible for. Some insurers offer more discounts than others, but there’s no single insurer that offers every discount under the sun. You might find big savings for good grades at one insurer, or a discount for being a teacher at another. Just make sure you’re not leaving money on the table by not applying for discounts that you’re eligible for.
Two particularly big discounts to look into are pay-per-mile insurance and telematics. These similar programs use a plug-in device or a smartphone app to see how much or how safely you drive and adjust your rates accordingly.
A pay-per-mile insurance program tracks how much you drive and charges you a per-mile rate . If you don’t use your car much, this kind of program can be a great way to reduce your bill.
On the other hand, a telematics device simply monitors your driving habits. If you are a safe driver, you’ll see your rates go down, regardless of how often you use your car.
Who A Car Insurance Policy Covers
If you get into a car crash, your insurance may cover:
- the driver
- all passengers
- other people who are involved
In some provinces, injured passengers or other people involved in the accident who have their own insurance policy must make a claim under their policy first.
The principal driver is the person who drives the car most often.
Additional drivers are other drivers in the household who may use the car as part of their routine, such as driving to school or work. Your insurance policy must list additional drivers. If additional drivers have a poor driving record, your premiums may increase.
Occasional drivers are drivers who only use the car from time to time.
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- Statistically speaking, more male drivers under the age of 25 are involved in auto accidents than women. This is the leading force behind the increase in auto insurance rates
- Auto accidents double for men, when you look at men ages 25 and under and women ages 25 and under
- DUI statistics also show that men in this age range are more likely to drink and drive, and those who do are more likely to be involved in fatal crashes
- The biased prices in premiums end once the age of 26 is reached. At this point, men and women are on an equal level
Like it or not, men pay more on the average for auto insurance than women do. The main reason for this is the statistics that surround male drivers.
Is There Racial Bias In Car Insurance Premiums
Ariana Chávez has over a decade of professional experience in research, editing, and writing. She has spent time working in academia and digital publishing, specifically with content related to U.S. socioeconomic history and personal finance among other topics. She leverages this background as a fact checker for The Balance to ensure that facts cited in articles are accurate and appropriately sourced.
Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. He earned the Chartered Financial Consultant® designation for advanced financial planning, the Chartered Life Underwriter® designation for advanced insurance specialization, the Accredited Financial Counselor® for Financial Counseling and both the Retirement Income Certified Professional®, and Certified Retirement Counselor designations for advance retirement planning.
Over half a century since the civil rights movement began, racial discrimination exists in places where you would never expect it to.
One of those places, surprisingly, is the insurance market. Black Americans pay much more than White Americans for something that is required by law in nearly every state: car insurance.
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Drivers Aged 30 To 64
From 30 to 64, car insurance premiums steadily decrease through the years, but, unfortunately, you wont get those major decreases as you saw at 25. When drivers hit 30, theyve had lots of experience on the road and age becomes less of a factor in determining car insurance premiums.
During this age range, things like the kind of car you drive, the number of moving violations on your record and credit score are greater factors to determine your increase or decrease in car insurance premiums.