Breaking News: Gender No Longer to Determine Auto Insurance Rates

Fran Majidi
January 21, 2019

California just joined six other states in banning gender as a factor in determining car insurance rates. Other states that embrace this law include Hawaii, Massachusetts, Montana, North Carolina and Pennsylvania. In most states, gender can still be used as a factor in determining risk, which in turn determines insurance rates.

California has the largest number of drivers in the U.S., and people in that state will begin shopping around to see if they can lower their car insurance rates. If you’re one of these people, contact an insurance-comparison service, like the one offered by SmartFinancial, an award-winning insurance technology company.

The reason behind banning gender as a rating factor is that like race, ethnicity and sexual orientation, gender has been deemed unfair to use as a measure of risk because it’s out of one’s control. Banning gender from being used to determine rates should come as no surprise: The Gender Recognition Act of 2017 went into effect as a measure to protect the rights and concerns of transgender people, who now have the choice of picking amongst three genders on their driver’s license: “male,” “female” and “nonbinary”.

Determining a driver’s car insurance rate is based on a complicated algorithm only insurance underwriters completely understand. Among a whole host of factors that are taken into consideration, these are weighed most heavily: education level, address, driving experience, driving record, marital status, the type of car you drive and your job.

Naturally, most people who’ve heard about this new law are wondering if their rates are going down or up. Unfortunately, the answer is not so simple. In fact, it’s interesting to note that no one is truly sure who has been paying more until now, men or women? The myth is that women were paying lower car insurance rates than men because they are considered lower risk drivers, but several sources say that women were actually paying more. The truth is that insurers have been rating genders differently, so a gender preference has never been consistent across the board, not even in California.

The demographic most likely to see a significant rate change is new drivers of both sexes. Previously, new female drivers were paying the highest rates with some insurance companies and new male drivers were paying the highest rates with other carriers. Now, their rates will be equalized.

According to California’s department of insurance, women with three or fewer years of experience behind the wheel will be impacted the most, with rates going up as much as 6% and males seeing a decrease of about 5%. These estimates are based on some number crunching from the top 17 insurance carriers who now insure the majority of drivers in California.

According to Janet Ruiz, the spokeswoman for the Insurance Information Institute, rates overall will not be impacted much at all because in California gender was not weighed as heavily as the other factors noted above. However, Douglas Heller, of the Consumer Federation of California’s Education Foundation, says that women over the age of 25 have been paying significantly higher car insurance rates and will feel less burdened when this new law goes into effect. The non-profit advocacy group, Texas Appleseed, also agrees with Heller’s assessment that despite the contrary myth, women have been paying higher insurance rates across the board.

While insurers have until July to turn in gender-neutral ratings to the state’s Insurance Department, you may be paying more than someone with the same exact profile as you with the same plan and a different gender. However, if you get a new quote today, you’ll get rated without your gender being taken into consideration at all. Only then will you truly know if you were being penalized for being male, female or non-binary.

Regardless of this new law, you should always shop your rates every six months because auto insurance rates change often. There are also steps you can take to lower your rate: Avoid getting any speeding or moving violation tickets by following the rules of the road; Get vehicle safety devices installed in your car; If you’re a student, keep your grades high for a Good Student Discount; If you’re older, you may be eligible for a Mature Driver Discount. Check with your agent to see if you are eligible for yet another discount by taking a Driver Safety Course.

Work regularly with trustworthy sources like the folks at SmartFinancial to determine the best insurance policy for the lowest rate. We’re always here to help.

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