The end of cheaper car insurance for women

Car insurance premiums are rising fast for all drivers but cover could get particularly costly for women.

Cheaper car insurance for women could be on the way out if the European Court of Justice (ECJ) rules that setting premiums according to gender is illegal. The Advocate General at the ECJ believes offering different rates for male and female drivers contravene EU anti-discrimination laws. If this opinion is carried through by the court, women may have to wave goodbye to lower cost policies in the future.

I must admit I don’t quite understand the Advocate General’s logic. It’s an unquestionable fact that car insurance is cheaper for women for the simple reason that they claim less than men according to all the statistical evidence. What's more, the claims women do make tend to cost less than those made by male drivers. So it seems fair to me if women cost insurers less, they should pay a lower premium for cover than men.

If gender bias in insurance is outlawed - and this may not only affect car insurance but also life insurance, health insurance, annuity rates and so on - it will be very bad news for the insurance companies such as Sheilas' Wheels and Diamond which specialise in providing cover to female drivers only.

Premiums are rising for all drivers

As if all this wasn’t bad enough for female drivers, the cost of car insurance for all drivers is rising at an alarmingly fast pace. Results from the latest AA British Insurance Premium Index reveal the cost of comprehensive cover has increased by 11.7% over the last quarter, and a whopping 29.9% over the last 12 months. The average policy across all drivers now costs a massive £1,249.71.

Meanwhile, third party, fire and theft cover has risen 9.8% compared with three months ago, and is up 32.2% compared with 12 months ago. This time the average cost for this type of insurance is £1,246.41.

The costs look slightly more palatable using the AA’s ‘Shoparound index findings’ which takes the average of the three cheapest quotes available. But even then, comprehensive cover has risen 11.5% over the quarter and a huge 39.3% over the last year, with the average premium running to £791.82.

It’s an even worse story for third party, fire and theft cover which has gone up 12.1% over the quarter and an eye-watering 54.6% over 12 months, with the average premium now standing at £1,097.72.

Of course older drivers, who have built up their no claims discounts, can expect to pay premiums which are significantly below the average. But the AA premium index data certainly gives a good indication of just how expensive cover has become overall.

Making losses

Despite these impossibly high average premiums, car insurers have still been losing money. Over the last few years hot competition among insurance companies has intensified greatly, pushing the most competitive premiums down to artificially low levels. This is partly down to the emergence of car insurance comparison sites, such as the car insurance quote engine at lovemoney.com, which give drivers easy access to the cheapest policies on the market.

According to the AA, an increase in fraudulent claims alongside a dramatic rise in the number of injury claims has eaten into the insurers’ profits. In fact, for every £100 taken in car insurance premiums, around £123 has been paid out in claims.

Clearly, this isn’t sustainable for much longer, suggesting that higher premiums for all drivers, as well as specifically for women if the Advocate General gets her way, could be on the cards.

Recent question on this topic

• fodigie asks:

  What does 'Protected No Claim Bonus' mean?

  • 
    MikeGG1 answered "You will have to check your policy for the precise wording. It may be that 2 are allowed in a..."
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How to combat rising premiums

Drivers of both sexes will do themselves a huge favour by shopping around every time they need to renew their car insurance. It’s those drivers who blindly accept the renewal quote from their existing insurer who are bound to lose out.

When the time comes, make sure you take advantage of the car insurance quote engine at lovemoney.com to compare premiums from a wide range of insurers. Female drivers should be a little wary of women-only insurers, however. These companies may well provide cover specifically suited to women, but they don’t necessarily always provide the cheapest quotes.

We investigated this issue last year and found that while women-only insurers offered certain additional exclusive benefits - such as handbag insurance - the costs could usually be beaten by standard insurance companies. You can find the full results from this research in The best car insurance deals for women. Of course, I’m not saying you should discount women-only car insurance entirely, but do make sure you compare the quotes you get from these specialist insurers with the wider market.  

We have written plenty of articles on how to cut your car insurance premiums. For a round-up then pretty straightforward ways to reduce your quote, read 10 tips to beat rising car insurance costs.

In an addition to these 10 tips, you should also bear in mind how you describe your occupation to an insurer as this can make a difference to the premiums you’ll pay. For example, a driver who states they are a shop assistant could pay more than a sales assistant. Both are entirely accurate, so why not go for the cheaper option? You can find out more about how your job could affect the cost of cover in Trick your insurer into cheaper premiums - legally.

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