Insurance rates to soar for women

Insurers won't be able to charge men and women different insurance premiums after a ruling by the European Court of Justice

It’s not been a great few months for motorists. Soaring petrol prices and rising insurance premiums have made it more expensive than ever to own a car. And the bad news is; it’s about to get even pricier.

The European Court of Justice (ECJ) today ruled that insurers are no longer allowed to consider gender when setting insurance rates. The court argued that using gender as a risk factor was discrimination and against European equality principles.

So how will this affect how much you pay for your car insurance?

What it means for you

Men currently pay higher car insurance rates because statistically they are involved in more severe accidents and make more insurance claims. The British Insurance Brokers’ Association (BIBA) estimates that the average car claim by an 18-year old man is £4,400 but for an 18-year old woman it’s only £2,700.

The ruling will hit women only insurers like Sheilas’ Wheels and Diamond as rates begin to equalise and female drivers are forced to pay more their policies.

The decision will probably have the biggest impact for young female drivers who could see their rates jump by 25%-30%. While young male drivers – who are statistically the most dangerous motorists – could see their premiums fall by about 10%.

But many are also suggesting that the ruling won’t reduce premiums for men at all as they are still risky motorists to insure. In fact, if you consider that car insurance providers have operated at a loss for many years, it seems highly likely that insurers will use this ruling as a way to increase takings and return to profit.

The changes will also see insurers shift risk onto other personal factors such as your job or postcode. This could mean that those working in female dominated jobs begin to see falls in their premiums!

But it’s not just car insurance that this decision will affect.

Life expectancies

The ECJ decision will also affect the cost of other gender influenced policies such as life insurance and pension plans.

Providers of these policies use gender as an indicator of your life expectancy. In the case of life insurance, because women live longer than men – and hence will make more monthly payments into their policy before a claim is made – they currently receive lower premiums.

Women also currently receive a lower annual pension payout (annuity) than men for the same pot of money. This is again because women are expected to live longer, and hence will receive more pension payments before they die.

Today’s court ruling will see life insurance premiums and pension payments made unisex - meaning that women will pay more for life insurance and men will receive a smaller annual pension.

What can you do?

The ECJ has given insurers and pension providers until 21 December 2012 to adjust to these requirements. But in reality we’ll probably see pricing models gradually phased in over the next 18 months.

The obvious reaction is to assume that women should renew their car and life insurance policies as soon as possible and men should hold off until after December 2012. While this may make some sense for women, it's not terribly practical for men - who should still make sure they’re fully covered now – whatever the price.

But there a few things you can still do to reduce your insurance premiums:

Car insurance

Get the right car: Driving a fast, powerful car will push up your premiums, especially if you’re a young driver. Likewise, expensive or rare cars will cost more to insure due to the increase cost of the replacement parts. Make sure you buy a car that fits your needs and for heaven’s sake don’t modify it as this will certainly push up your rates.

Lock it up: Keeping your car in a garage or driveway will reduce your premiums, as will adding an alarm, immobiliser or tracker.

Pass plus: Advanced driving courses like Pass Plus could bring your premiums down by as much as 30%, especially if you’re a young driver.

Add a driver: If you’ve just started driving, adding an older, more experienced driver to your policy can bring down your rates. That said, you should beware of ‘fronting’ – where the main driver on a policy isn’t actually the main driver of the car. This is illegal and you can read more about it at This lie could cost you thousands.

Shop around: The best car insurance deals will be available to new customers only, so shop around every year when your policy is up for renewal. You can find all the market leading rates using our car insurance comparison centre.

For some more advice on reducing your car insurance premiums head over to 10 tips to beat rising car insurance costs.

Life insurance

Get healthy: Life insurance premiums will be higher for those who have (to put it delicately) a larger height to weight ratio. So if you shape up and get healthy, you could see your rates go down.

Smoking will also push up premiums. So if you quit the cigs, you’ll save a fair few pounds. Insurers will class you as a non-smoker if you’ve been free of cigarettes and nicotine replacement products for 12 months.

Get the right policy: Make sure the size and term of your policy is suitable. The best way to do this is to tot up all your debts, add on the amount you’ll need to provide for your family and insure for this amount.

If you’re taking out the cover to protect your partner, you’ll need a policy that will last until they reach pension age. If it’s to protect your children then it should run until they’re no longer financially dependent on you.

Update your policy: Risky jobs or hobbies will push up premiums, so if you’ve recently retired from the bomb squad or given up shark diving – tell your insurer!

Shop around: Life insurance premiums are changing all the time, so even if you’re happy with your policy, it’s still a good idea to check the current rates. You can do this by heading to our life insurance comparison centre.

More: Get a great car insurance and life insurance policy with lovemoney.com | Why women should pay more for car insurance | Why your car might not be there in the morning