What is the EU gender directive?
In March last year, the European Court of Justice ruled that it was illegal for insurers to take gender into account when calculating the cost of both car and life insurance premiums.
The ruling, known as the EU gender directive will come into effect on December 21, 2012 and so any car insurance quotes run after midnight on December 20, 2012 can no longer be subject to gender bias.
Until then, however, insurance companies can still use gender as a factor when calculating insurance costs and charge men and women different rates accordingly. In other words, in order to benefit from cheaper rates, women should get their renewals sorted and men should add a female driver to their policy, in advance of this date.
But why are women typically cheaper to insure than men in the first place?
The car insurance gender divide
When calculating the cost of car insurance, insurers use ‘risk-classification techniques’ and pricing models, in which gender plays a pivotal role.
As highlighted in an industry research paper from the Association of British Insurers (ABI): “There are significant gender differences in accident, morbidity and mortality risks. Gender is used when it helps the accuracy of pricing products which cover these risks.”
Put simply, insurers’ statistics show that women are less risky drivers than men for insurance purposes – not only do they make fewer claims, but any claims they do make tend to be cheaper than those lodged by male motorists.
In addition, government figures show that men account for more than 92% of all driving convictions in the UK and a staggering 98% of all dangerous driving convictions.
Furthermore, latest figures from the Department for Transport show that males were involved in over twice as many accidents (169,506) as females (77,583) in the year to September 2011.
Understandably, insurance companies have used such statistics to justify their claim that gender has always been a legitimate metric to use when calculating the cost of car insurance. Nevertheless, from December 21, the EU has ruled that discrimination must be stamped out – along with this particular pricing model.
How you can save
But the fact remains that for the next five months women can still benefit from cheaper car insurance and men can also profit too by adding a female as a named driver on their insurance policy.
It would be fair to assume that having more drivers on your policy would push the price up, but by naming a driver who is considered a lower risk, it can help reduce your premium – so long as she has no motoring claims or convictions.
This is a technique that is often used by young drivers who can see a significant reduction in their premium price by simply adding an older driver, usually a parent, on to their policy.
In both cases however, you must be sure that you do not represent your named driver as the main driver on your policy if this is not the case. This is a process known as ‘fronting’ and is actually against the law.
For more information on fronting, read my article, Car insurance: Are you breaking the law?
But if this perfectly legal trick is not an option for you, the good news is, there are other ways to reduce cover.
Tips to lower your premium
One of the simplest ways to reduce your premium price is to shop around to find the cheapest quote from a number of insurers. By using MoneySupermarket’s price-comparison tool you can instantly compare quotes from over 100 leading companies.
If you are a young driver then you could benefit from taking out a telematics insurance policy. Also known as ‘pay-as-you-drive’ this involves having a box fitted to your car which monitors the way you drive. If it’s good, it can significantly cut the cost of your annual premium.
However, if you cover a large distance over the course of the year and do a lot of motorway driving then a telematics policy may not be right for you. For more information on telematics insurance, see the video below.
Other ways to cut the cost of cover include increasing the voluntary excess – the amount you must pay towards the cost of any claim – on your policy, lowering the number of miles you cover each year and adding extra security to your vehicle, including parking it off road overnight.
In addition, if you can afford to pay for your car insurance in one lump sum, rather than in monthly instalments, then you could also make a significant saving as insurers charge interest for spreading the cost over the year.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct