Are you married yet? It would make your auto insurer happy if you were.
So much so, in fact, that they will offer you a cheaper rate for tying the knot. Premiums are on average about 11 percent lower for married couples.
The trouble is, the discount is at best a pricing strategy based on thin evidence about the safety of married drivers. At worst, it’s a system that penalizes low income and minority drivers.
It is another example of a proxy being used to set premiums instead of actual driving behavior. This is something insurers should have to rely on less and less given advances in technology.
Marital status may be a smaller factor than something like credit scores or where you live. Still, it’s another instance where one set of drivers winds up paying more for something that is not related to their driving.
Is that fair?
Car insurance: married vs single
Your marital status could influence your car insurance rates. Generally, married couples get a lower car insurance rate than people who are single. If you just got married, you should call your insurance company because you might get a discount.
Since so many factors affect rates, there isn’t one clear-cut figure for exactly how much married couples save on car insurance — but rates do tend to be lower than for single people.
To be sure, when compared with other non-driving variables, marriage has less impact on premium rates. Consumers with a poor credit score can pay twice as much as those with excellent credit, all other things being equal, as do those in predominantly minority neighborhoods.
Source: Quadrant Information Systems via CarInsurance.com
The discount applies for same sex married couples with most insurers, though the Consumer Federation of America, a consumer watchdog group, says that varies by state and by insurer.
Some insurers may also offer the discounts for domestic partners. But that practice isn’t as widespread as the discount for marriage.
Why the discount exists
Insurance rates used to be based on just a few things—driving record and driving experience mainly. But in the 1960s and 1970s, insurers gained access to a much wider set of data about their customers.
There was an explosion in the number of classifications they started using to try to figure out which types of people would be more likely to file claims and therefore cost them more. These were the customers they charged more.
“The insurance company that has the most classes is the insurance company that sets the classes for the industry,” says Robert Hunter, director of insurance with the Consumers Federation of America and former Texas State Insurance Commissioner.
Yet insurance groups don’t share the actual research they base this judgement on. But there’s an insistence that the practice is actuarially sound.
“The statistics bear it out,” says Robert Hartwig, clinical associate professor and director of the Center for Risk and Uncertainty Management at the University of South Carolina and past president of the Insurance Information Institute, a trade group. “Individuals who are married tend to expose insurers less to overall claim costs.”
The closest consumer groups have come to getting a justification from the industry is a 2004 study that insurers say proves the point. But the report was released years after the practice of marital discounts was already well established.
For what it’s worth, the study did show that never-married people have a higher driving injury rate than married people. Consumer advocates criticize the study because it’s based on data collected in New Zealand in the early 1990s. It also involved only 138 injuries, a substantial number of which also involved motorcycles.
Further, the difference in injury rates between married people and singles was only about one percentage point.
Are married drivers safer?
Anyone who studies statistics knows that correlation and causation are not the same. Even if married people have fewer accidents — and fewer claims — it may not be their marital status that accounts for the behavior.
Married people may share other traits in common that could be the reason behind their supposed safe driving.
Singles are more likely to be younger and less experienced drivers. Those types of drivers have more accidents because they haven’t had enough experience to learn defensive driving maneuvers or when not to get behind the wheel, such as after drinking too much or pulling an all-nighter.
“I think the data [around single drivers] is probably biased by young men, who tend to have really high incidents of accidents and tickets,” Hunter says. “There are a lot of people who are excellent drivers who are now widows and they’re not bad drivers now that they’re single.”
Equal opportunity discrimination
In addition to young singles, older widows and divorced people also see higher rates. In fact, with some insurers, a widow could see her rates increase by as much as 226 percent following the death of her spouse, according to a study by the Consumer Federation of America.
The CFA studied six insurers in 10 major cities, using a hypothetical 30-year old, safe, female driver. When the driver’s age was increased to 50, a widow still paid more than a 50-year old married woman. This shows that it’s marital status that drives the disparity.
Source: Consumer Federation of America
It’s another way insurers charge more to groups of people who can’t afford it.
All just a marketing strategy?
In their business model, insurers try to balance two sometimes competing things. First, they want to court customers who won’t file many claims. Next, they also want to focus on profitable consumers who might buy more than one insurance product.
To insurers, the existence of a marriage license is a shorthand for customers who have other insurance needs.
Married people have a higher chance of fitting the bill. According to researchers, they have greater financial security than singles because they are able to pool their assets. They are more likely to own a home and have children. They might even own a second home and a boat, giving insurers additional ways to sell policies.
Yet regulators themselves may not be comfortable with the practice. The National Association of Insurance Commissioners’ voiced concern about marriage discounts in a 2017 report.
California has curbed the use of non-driving variables in the pricing of auto insurance when voters passed Proposition 103 in 1988. Since then, insurers are required to use three variables in descending as the primary determinants for setting rates: driving record, miles driven per year and experience. Only after that can insurers bring in other factors.
“As a result, those other factors, including marital status, have much less impact,” says Hunter.
A better way
At Cover, we don’t think an insurance company should care if you’re married. It’s your attention to the road, your driving behavior and experience that determine what kind of risk you are on the road.
This means alternative tools to assess driving risk based on what you actually do behind the wheel, such as telematics. Those tools will give you more transparency to know what goes into setting your premium.
This could also mean things like using technology to deter distracted and drunk driving, prescreen for damaged assets, and better identify forms of fraud.
With initiatives like this, we wouldn’t be asked to believe that just the act of walking down the aisle make you a better driver.
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