Is it sexist that some men pay higher premiums for car insurance than women?

The European Union’s highest court drew judgement on this issue in March, ruling that it’s now illegal for the insurance industry in the EU to charge different rates based on a driver’s gender.

In Australia, however, there is no such ruling about gender-based discrimination in regards to car insurance and as a result some premiums for men and women can be vastly different.

Take, for example, two identical applications for car insurance made online through the RateCity comparison tool.

A 37 year-old female who has been driving for 18 years, with a V8, 4.0 litre four-door sedan, would be offered a best quote that is $50 cheaper than a 37 year-old male with the same car and motoring history.

It’s worse if you’re younger. Look at two identical drivers in their early 20s and the difference for men and women can run into the hundreds of dollars.

Is it fair?
Statistically one reason for the discrepancy in costs is that men are more likely to have an accident while driving than women, particularly in the case of younger drivers. According to one British insurance provider, AA, young male drivers are twice as costly to insure as young female drives on average.

Should Australian courts implement a similar law to the recent EU insurance ruling, some say that women are likely to see their premiums rise as providers rebalance the books.

That is likely to be the case in the UK, where researchers found that young male drivers in England would have their car insurance premiums cut by around 25 percent as a result of the new legislation. Young women, however, were likely to see up to a 50 percent hike in their premiums. Therefore safer women drivers could end up subsidising the lower costs for men, who are more likely to have accidents and therefore claim.

Other ways to reduce your insurance bill
We think Australian courts would be unlikely to follow in the EU’s footsteps – but the data makes it clear that some female drivers could save even more by shopping around for a better deal each time you renew.

By comparing car insurance online at RateCity, you could potentially save up to $400 if you’re a female driver in your late 20s. So clearly, it pays to do your homework!

Find best car loan interest rates and no ongoing fees at RateCity.