The Number of States Banning Car Insurance Companies From Using Gender in Determining Rates Is Growing

Are the biggest beneficiaries men or women?
Will this person behind the wheel pay higher or lower rates?

In January, California became the sixth state to ban auto insurance companies from using gender when assessing risk factors for private passenger car insurance. Ricardo Lara, the Golden State's new insurance commissioner, declared, “Gender, race, ethnicity or sexual orientation are beyond your control, and it is not a fair or even an effective way to predict risk.”

The change could potentially alter rates for drivers across the state. Teen boys could benefit the most, with an average 5% decrease in their auto rates, while teen girls could see rates increase 6% on average.

Hawaii, Massachusetts, Montana, North Carolina, Pennsylvania and some parts of Michigan also ban using gender to set auto insurance rates.

Why auto insurance companies believe gender matters

Auto insurance companies have traditionally used gender as a factor in calculating rates because statistically, women have fewer accidents than men do, especially when it comes to serious accidents and DUIs.

But the California Department of Insurance determined that some insurers found male drivers were a higher risk while others claimed the inverse, and that gender-related accident rates varied widely by location. “Gender’s relationship to risk of loss no longer appears to be substantial,” the department wrote in a report that detailed the reasons for gender non-discrimination in auto insurance rates.

How can I save on auto insurance?

Currently, the average annual cost of car insurance in the U.S. is $941.65, according to a ValuePenguin study, with Louisiana leading the nation at $1,824 and North Dakota having the lowest average annual rate at $428.

Here are ways that you can save money on your annual auto insurance premium.

Compare insurance costs before you purchase a car. Some makes and models have higher insurance costs than others because premiums are based, in part, on the car’s purchase price, its overall safety record, repair costs and the likelihood of it being stolen. Many insurers offer discounts on cars that are known to be safe and those that have anti-theft features, such as steering wheel, hood and tire locks and electronic immobilizers on car keys.

Compare auto insurance quotes. You can save almost 50% if you choose an insurer that offers the lowest auto insurance rates in your state and nationwide without sacrificing quality of service.

Raise your deductible. The more expensive the car, the more you’ll save if you raise your deductible. That's because a high deductible means you have to pay more money before insurance kicks in, but in return you pay a lower amount in premiums.

You can also save money by bundling your auto and homeowners insurance policies. Other ways to keep your car insurance costs to a minimum include, maintaining a good credit history, selecting different types of coverage to maximize savings, taking advantage of low mileage discounts and seeking out group insurance policies.

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