How Do Your Car Insurance Rates Vary Based on Age, Gender, and Geographic Location?

————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————

One of my favorite topics to ponder over and research is the cost of living differential based on certain demographic factors. Of these, probably the most interesting (to me) is the difference that is often seen in the cost of goods and services based on geographic location. It’s amazing how much you can save simply by locating yourself in the right place!

In my experiences of living in New Jersey, Pennsylvania, Arkansas, and Virginia, I’ve unofficially found that car insurance is no exception to this phenomena. During my time in PA and NJ, I found that many of my friends were paying upwards of $3000 per year in car insurance. When I told them that several people I know in Arkansas pay $1200 per year, they were simply amazed!

Because of the drastic difference in the price of car insurance I’ve heard from my friends and wanting to save money on car insurance being a topic applicable to almost everyone, I thought it would be an interesting thought exercise to do a little online research to see if significant price differentials exist based on other demographic factors.

Investigation Setup

Insurance Provider


According to CarInsuranceCompanies.com, the largest car insurance provider in The United States is State Farm. State Farm has a total of 75 million policy holders, corresponding to 18.7% market share. This is quite impressive!

When I first started looking in to this investigation, due to State Farm’s popularity, I was hoping to use their car insurance quotes tool to generate car insurance premium prices based on the different demographic information we input. However, since you have to input the specifics of your current car insurance coverage, using State Farm’s quote tool would be far too complicated for a broad analysis like we are looking for.

Because of this, my focus shifted to reviewing previously-published studies on the Internet.

How Do Car Insurance Premiums Vary Based on Age?

In my quest to find a specific answer to this question, the best resource I could find was the table below from Bob @ Christian PF (originally published on Insurance.com). I added a % Difference column to Bob’s original table in order to specifically see the change in premium rates at different ages. It definitely makes for some interesting analysis!

From the table above, the most shocking finding is that it appears that between the age of 16 and 25, car insurance premiums decrease by almost 50%! Wow! That’s truly amazing! However, having been a driver during college and especially high school and seen the increased risk factors for young drivers, I cannot say I blame the insurance companies for charging high premiums. It’s probably smart business with how likely 16 year old driver’s are to get in a wreck.

In my experience, the specific risk factors present to drivers in high school are as follows:

• Driving with a full car of people – In high school, within each group of friends, there can exist a pretty significant range of ages (significant in high school terms being 1 year – haha). Because there are fewer numbers of drivers, more people are likely to pack in to one car. Naturally, with more people in the same car comes more talking and distraction, leading to an increased risk of accidents.
• Loud music – High school kids are also more apt to listen to very loud music (subwoofers with huge amplifiers were a popular item among my high school crowd!). This loud music can take the driver’s attention away from the road and increase the risk for accidents to occur.
• Driving being a “novelty” – Since driving is a new experience in high school, kids are likely to spend an enormous amount of time simply “cruising” around town. Many times, this takes place late at night, which can increase the exposure of the driver to accidents and/or drunk drivers.

How Do Car Insurance Premiums Vary Based on Geographic Location?

The best resource I found answering this question was the table below from The Insurance Information Institute.

Examining the table above, it’s not surprising to me that 7 of the top 10 most expensive states for car insurance either are Northeast states or contain many Northeast state retirees (Florida). However, it’s surprising to me to see Louisiana on the list as having such high car insurance premiums (pretty much the same as New Jersey). Does any one have any guesses to why this is? I thought Louisiana was a pretty rural, low-traffic state…


The states with the lowest cost for car insurance premiums were Iowa and North Dakota. This makes intuitive sense to me since these states typically have low traffic and low population density. What’s wild is that car insurance rates in these two states are over 50% lower than rates in DC and New Jersey.

How Do Car Insurance Premiums Vary Based on Gender?

According to a recent study published on PRweb.com about California car insurance premiums, the average annual policy for a male driver was 20% higher than for a female driver. They also found that the gender-pricing gap decreases as driver’s get older, with a fairly minimal gap being present above the age of 25.

However, at the age of 18, car insurance policies for male drivers can be upwards of $1,500 more than for females. Pretty wild stuff!

There is, of course, logic behind why the car insurance companies charge more to insure male drivers (except in five states where it is against the law to charge different rates for females than for males). According to the study, males are 196% more likely to be involved in a fatal car crash than a female.

In my opinion, the reason that guys are more likely to be involved in a fatal car crash is simply because we are not as smart as women when it comes to cars (sorry guys). In my experience, guys are more likely to participate in dangerous activities simply for the sake of “playing” with their car, whereas women typically just want to use the car to get where they are going.

For example, guys would be tempted to participate in the following activities, whereas I would think that girls would have no interest in doing so…

• Going 140 mph on the interstate simply to see how fast their car can go.
• Go shopping cart bowling at 80 mph slamming the shopping cart in to a concrete post.
• Go down a hill in a neighborhood street at 75 mph (in a 25 mph zone).
• Doing doughnuts in a parking lot or a field simply for the fun of it.

Needless to say, it’s very interesting to explore the fundamental psychological and economic differences between being a male and female. I think the next topic that I will explore regarding these gender gap differences will be seeing whether males or female typically get cheaper life insurance. It should be an interesting investigation!

How about you all? Have you experienced these or any other trends in car insurance premium rates? 


Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/madaroni/4964347820/sizes/l/in/photostream/