Why is Women's Car Insurance Much Cheaper?
Why is Women's Car Insurance Much Cheaper?
The cost of insurance is something that is cause for great debate. However, the disparity between the price paid by a man compared to a woman is possibly one of the most contentious matters. In fact, UK insurers will soon be adjusting these costs so as to fall in line with European Law on sexual discrimination. However, the big issue for many is why women get cheaper car insurance in the first place.
One of the myths is that women are better drivers. This isn't necessarily true. Insurance quotes are driven not by theoretical generalisations, but by the cold hard facts provided by statistics. So whilst women may have as many crashes as men, many of these are for insignificant amounts or were caused by other parties. This means that they can be accurately judged as a lower risk, which in turn means that they shouldn't pay as much for their cover.
Risk ratings aren't foolproof of course; there are exceptions to every rule. But in the case of female drivers, the statistics are on their side. This means that they cost insurers less and these savings are passed on. Or at least they were.
With the new legislation coming into power, car insurance providers will now have to abandon any previous scaling based on gender as this contravenes sexual discrimination laws. This will see a huge rise in costs for many drivers, as well as a discount for many men. So whilst the risk posed hasn't changed, the cost certainly has. But this will draw years of disparity to a close.
Other factors such as age will be left alone though, at least for now. The gender gap may be swallowed up, but insurers must still rely on the statistical data that they have at their disposal to determine the respective risk of each applicant.
So returning to age, younger drivers are considered far riskier than their more experienced compatriots. Again, this isn't to suggest that an older driver can't have a collision and doesn't pose any form of risk to the insurance company in question. However, because more young motorists claim each year and the sum total of these claims is remarkably high, everyone within this age band is treated the same. This was no different to how men and women were judged, and still are in many countries.
The difference in cost is often nullified when other individual factors are included though. For instance, a woman who has made a significant claim within the last year or who has committed a driving offence will often be charged the same as a man in entirely the same situation. This is because the generalities of risk are removed and replaced by those that are specific to the driver; i.e. they have already claimed and therefore are more likely to do so in the future.
Experience can also nullify the discrepancy in costs between drivers of different genders. Therefore if you've reached the maximum no claims bonus, you will have amply proven how trustworthy you are as a driver, therefore issues of sex should be far less prevalent in these situations.
Eroding the gender gap will be welcomed by some and criticised by others. There will be those who point at the statistical data and note that women deserve to receive cheaper car insurance based on their significantly better driving record. However, there will also be others who claim that this is simply an unfair generalisation that impacts men of all ages but particularly those already in higher risk groups. The reason the difference existed though wasn't due to prejudicial views, simply the fact that women cost insurers less on average.
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