How much do you pay for your car insurance each month? Do you think you’re rate is fair? If you’re a woman, do you pay the same as your male counterparts? If you’re a Michigan driver, chances are you’re not. In fact, according to an investigation launched by Scripps station WXYZ in Detroit, auto insurance companies in Michigan regularly discriminate against drivers based on their gender or relationship status. You’re probably wondering how this practice is legal, right? After all, there are laws in place to prevent this type of discrimination.
How much do you pay for your car insurance each month? Do you think you’re rate is fair? If you’re a woman, do you pay the same as your male counterparts? If you’re a Michigan driver, chances are you’re not. In fact, according to an investigation launched by Scripps station WXYZ in Detroit, auto insurance companies in Michigan regularly discriminate against drivers based on their gender or relationship status. You’re probably wondering how this practice is legal, right? After all, there are laws in place to prevent this type of discrimination.
Think again.
Actually, according to the investigation, the state of Michigan is “rubber stamping the discriminatory practices” of many auto insurance companies. For example, last fall, Michigan-resident Melinda McKee learned her husband, Jim, had stage four lung cancer. Tragically, he passed away earlier this year in January, which meant in addition to mourning her husband’s loss, McKee had to take care of things like canceling “the auto insurance his leased car.” It was during this process with AAA that she got shocking news. In an interview with Scripps, McKee said, “I got a letter from AAA that said because I am a widow I am in a higher risk bracket.”
That meant that even though she had a perfect driving record, her rates “went from under $200 for two vehicles to more than $300 for one vehicle.” She said, “It is completely unfair.”
Steve Gursten, the head of Michigan Auto Law completely agrees with McKee. When commenting on the matter, he said, “It is not legal…There is a law right on point that says women can not be charged more than men, nor should they by the way, because statistically, women are safer drivers.”
Just how much does gender and marital status impact auto insurance rates, though? Well, according to the Scripps station WXYZ investigation, quite a lot. During the investigation, “reporters requested quotes from two major companies that provide quotes online. That allowed them to change only gender or marital status on the application.” What they found was alarming. For example, “as a single woman, Allstate’s Esurance quote was $294 per month,” while a quote for a male was $230 per month for the same policy. That means the “penalty for being a woman was 28%” at Allstate. At Progressive, the reporters determined the “female penalty was 18%.”
At Progressive, the female penalty was 18 percent.
The investigation also discovered that “married men paid more than single men and single women more than married women.”
Unsettled by its findings, WXYZ confronted the Insurance Alliance of Michigan to discuss the blatant discrimination. However, the response it received did little to quell the reporter’s concerns. According to the Insurance Alliance of Michigan, “the state insurance commissioner rubber stamps all rates in Michigan as reasonable.”
When discussing why the insurance commissioner does this, Peter Kuhnmuench, the executive director of the Insurance Alliance of Michigan said, “Because the department can pull their license, can find them. There are all sorts of recourse there if you feel you are being mistreated by the insurance company.”
Though State Insurance Commissioner Patrick McPharlin was not available to comment on the matter, Andrea Miller, a public information officer, said “gender discrimination is allowed in pricing.” She added, “That is something legal when they are selling the group insurance policies.”
How is discrimination legal, though? Well, there happens to be a law designed to “let groups, like AARP, offer less regulated insurance policies to save members money.” By identifying as a group, individual auto insurance companies can skirt around existing regulations.
So what do insurance companies have to say for themselves? For starters, AAA defended itself by saying it has “systems in place meant to prevent any discrimination based on gender and marital status in pricing.” According to WXYZ, AAA also said it plans to “work to fix this issue and reached out to McKee.”
As for Progressive and Esurance, neither confirmed nor denied that “gender and marital status impact pricing.” In a recent statement regarding the matter, Progressive said:
“We work to provide consumers with accurate quotes using multiple rating factors that are actuarially justified and proven to help predict risk.”
Sources:
Michigan allows auto insurance companies to charge women, widows higher prices
Is lawmaker blocking bills to stop gender discrimination by auto insurers?
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