Recently, the insurance rate experts at Bankrate.com (RATE) subsidiary insuranceQuotes.com did some digging into this issue. Crunching the numbers on car insurance rates in every U.S. ZIP code and canvassing 60 percent to 70 percent of the insurance companies operating within each such ZIP code, iQ highlighted age, gender and marital status as three of the most important factors affecting car insurance rates. Combined, they can cost one driver as much as 50 percent more for insurance than another, similar driver is forced to pay. Here's how.
The highest premiums are levied on the youngest drivers -- the ones just entering the workforce and least able to afford pricey insurance. On average, a 20-year-old man driver can expect to pay roughly twice the rate charged a 25-year-old male driver for the same car insurance. For women, this "youth surcharge" on a 20-year old driver is nearly as bad -- about 64 percent.
You probably noticed that already we're seeing a difference in rates charged for boys as opposed to girls -- 20-year-old male drivers paying twice their elders' rates, while 20-year-old females pay "only" 64 percent more.
What this works out to, according to iQ's data, is a sort of 23 percent penalty on "maleness." For 20-year-old drivers, a male will pay 23 percent more for insurance than his female counterpart. Insurers say this is because women are less likely than men, on average, to file claims for car damage -- and so are cheaper to insure.
The good news here, is that this gender penalty rapidly evens out as drivers age. By age 25, for example, men's gender penalty drops to just a 4 percent premium over what women pay. And soon after that, the pendulum swings in the other direction. As iQ reports: "between the ages of 30 and 60, men actually pay slightly less for auto insurance than women."
Insurance premium calculations for men get even better for those between the ages of 30 and 60 who are married. At age 20, your average married male already enjoys about a 20 percent discount on car insurance relative to his single, 20-year-old counterpart. Married females enjoy a 22 percent discount.
By age 30, however, these discounts become virtually identical, and from age 35 to 60, married men pay a fraction of a percent less for insurance than do married women of identical age. (Curiously, this discount almost vanishes at the mid-life crisis age of 50, before expanding again as the crisis passes).
What It Means to You
So, now you know the precise numbers behind the commonly accepted wisdom that age and marriage are good for insurance rates, and maleness is bad. But how can you put this knowledge to use -- and save money on car insurance?
As far as practical advice goes, iQ offers a few of the usual suggestions. Get good grades in school to mitigate the size of the age penalty on insurance rates. Decline collision and comprehensive insurance coverage, and then drive carefully enough so that with any luck you won't need them. And in the event of an accident, only file claims for major damage -- not mere fender benders -- so as to not give your insurer an excuse to hike your rates any further.
The best advice, though, is to remember that the discounts and penalties described above -- for age, for gender and for marital status -- are all averages across the industry and across the country. Different insurance providers charge different rates based on different factors, and weight those factors differently.
If you think your insurer is treating you unfairly, shop around. Chances are good you can find someone charging a better rate for your personal characteristics, if you take the time to look.
Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.